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Economy in Brief

U.S. Weekly Mortgage Applications Fall As Refinancings Lag
by Tom Moeller April 29, 2009

As evidence that the mortgage refinancing boom has lost steam, the Mortgage Bankers Association reported that mortgage applications fell sharply for the second week in the last three. The 18.1% decline last week lowered applications by nearly one-quarter from their early-April peak.

The index of applications to refinance a home mortgage fell by 21.9% just last week and the decline pulled them 25.0% below the peak in early April. Nevertheless, applications for all of this month are still more than double the year-ago level.

Whatever strength there may be in refinancings is hardly evident in mortgage applications to purchase a home. They had risen earlier this month but the forward momentum lost steam, falling in each of the last three weeks. Overall these applications are down by one-quarter from the year ago level, a decline which is greater than the y/y decline in new plus existing home sales of 9.3% through March.

Falling again, the effective interest rate on a conventional 15-year mortgage dropped last week to 4.69%. For a 30-year mortgage, rates also were near their recent lows at 4.85%. Interest rates on 15- and 30-year mortgages are closely correlated (>90%) with the rate on 10-year Treasury securities. For an adjustable 1-Year mortgage the rate has been fairly stable this year near 6.25% but the rate still was down sharply from the 7.07% peak reached this past Fall.

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. Moreover, during the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

The figures for weekly mortgage applications are available in Haver's SURVEYW database.

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 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.

MBA Mortgage Applications (3/16/90=100) 04/24/09 04/17/09 Y/Y 2008 2007 2006
Total Market Index 960.6 1,172.2 69.4% 642.9 652.6 584.2
  Purchase 251.6 253.0 -26.0% 345.4 424.9 406.9
  Refinancing 5,108.2 6,540.7 168.1% 2,394.1 1,997.9 1,634.0
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