Recent Updates

  • New Zealand: GDP (Q1)
  • Thailand: Regional Property Transferred (Mar)
  • Korea: PPI, Domestic Supply Price and Output Price Index (May), 20 Days of Trade (Jun)
  • US: BOP including revisions (Q1)
  • South Africa: CPI (May), BER Manufacturing Survey (Q2); Nigeria: Public Debt, External Debt (Q1)
  • US: International Transactions Detail (Q1)
  • more updates...

Economy in Brief

Mortgage Applications Down Again
by Tom Moeller August 1, 2007

The total number of mortgage applications ticked down 0.3% last week following the 3.6% decline the week prior, according to the Mortgage Bankers Association.

Purchase applications dropped another 1.8% after the prior week’s 5.0% decline, the fifth decline in the last six weeks. The decline was to the lowest level since late April.

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.

Applications to refinance recouped the prior week’s decline with a 1.8% increase.

The effective interest rate on a conventional 30-year mortgage fell another six basis points w/w to 6.84%. Rates averaged roughly 6.91% last month, up from 6.28% in December. The peak for 30 year financing was 6.92% in mid-June. Rates for 15-year financing similarly fell to 6.53% last week. 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 and 35 top lenders in the U.S. housing industry. Then it derives its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site here.

Higher Risk Does Bring Higher Returns in Stock Markets Worldwide from the Federal Reserve Bank of St. Louis can be found here.

MBA Mortgage Applications (3/16/90=100) 7/27/07 7/20/07 Y/Y 2006 2005 2004
Total Market Index 607.1 609.0 15.1% 584.2 708.6 735.1
  Purchase 416.6 424.2 10.7% 406.9 470.9 454.5
  Refinancing 1,724.1 1,692.9 21.7% 1,633.0 2,092.3 2,366.8
close
large image