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Economy in Brief

Mortgage Applications For Home Purchase Up
by Tom Moeller September 13, 2006

For the second consecutive week, a firm rise in the number of mortgage applications for purchase led overall mortgage apps higher, according to the Mortgage Bankers Association. Purchase applications added 5.3% to the prior week's 3.7% rise and lifted applications in September 4.4% above the August average which fell 3.5% from July.

During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

Overall mortgage applications rose 3.2% last week after the prior period's 1.8% increase.

Applications to refinance ticked up 0.1% following the prior week's 0.9% decline. The average level of refis in September is up 1.0% from August which surged 13.3% m/m from July.

The effective interest rate on a conventional 30-year mortgage was stable w/w at 6.53%. The peak for 30 year financing was 7.08% late in June. The rate on 15-year financing also was stable w/w at 6.25% and the peak rate was 6.75%. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.

During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

Can Housing Be Green and Affordable? from the Federal Reserve Bank of Atlanta can be found here.

MBA Mortgage Applications (3/16/90=100) 09/08/06 09/01/06 Y/Y 2005 2004 2003
Total Market Index 584.2 566.3 -23.2% 708.6 735.1 1,067.9
  Purchase 410.2 389.7 -20.1% 470.9 454.5 395.1
  Refinancing 1,597.0 1,594.7 -27.4% 2,092.3 2,366.8 4,981.8
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