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Economy in Brief

Mortgage Applications Surged Again
by Tom Moeller November 15, 2006

The total number of mortgage applications surged another 4.3% last week on the heels of the 8.8% recovery at the beginning of November, according to the Mortgage Bankers Association. The gains lifted total applications this month 8.2% above the October average which fell 0.6% from September.

Applications to refinance increased 6.5% after the prior week's 11.0% jump to the highest level in over one year and are up 10.2% from the October average which rose 3.5% from September.

Purchase applications also rose a firm 2.7% after the prior week's 7.1% lift. The increase to the highest level since July raised November purchase applications 6.8% ahead of the October average level. Purchase applications fell 3.6% last month from September on average.

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.

The effective interest rate on a conventional 30-year mortgage fell eleven basis points w/w to 6.35% and was down from a high last month of 6.57%. The peak for 30 year financing was 7.08% late in June. The rate for 15-year financing fell ten points to 6.10%. The peak for 15 year financing was 6.75% during June. 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.

U.S. Labor Input in Coming Years is yesterday's speech by St. Louis Fed President William Poole and it is available here.

MBA Mortgage Applications (3/16/90=100) 11/10/06 11/03/06 Y/Y 2005 2004 2003
Total Market Index 647.5 620.9 -1.5% 708.6 735.1 1,067.9
  Purchase 412.9 402.2 -13.6% 470.9 454.5 395.1
  Refinancing 2,022.2 1,897.9 18.8% 2,092.3 2,366.8 4,981.8
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