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Economy in Brief
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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller August 19, 2009
The Mortgage
Bankers Association indicated that mortgage applications overall
increased 5.6% last week; however, that only made up for a 3.5% decline
during the prior period. Together, the latest figures left applications
for all of August up 0.6% from July after that month's 3.7% decline.
Applications still remained near the lowest level since last November.
There has been some life in purchase applications, but it's hardly vibrant. Applications rose 3.9% last week after a 1.1% increase during the prior period. Together the gains lifted applications for the month so far by 2.2% from July when applications fell 1.3% m/m. Nevertheless since the early-February low, purchase applications have risen 15% as new and existing home sales have recovered.
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.
Interest in mortgage refinancing has been stifled of late by the rise in interest rates. Applications to refinance made up merely the prior week's decline with a 6.9% increase. So far in August, applications are 0.8% lower than July and near the lowest level since November. Since their peak in January, refinance applications have fallen by three-quarters.
Since the beginning of this year, fixed-rate mortgage applications have fallen by slightly more than one-half while adjustable-rate mortgages have doubled. The number of conventional loans has fallen nearly two-thirds while gov't backed loans have fallen by more than one-third.
The earlier rise in mortgage interest rates
has stabilized, for the moment.
The effective interest rate on a
conventional 15-year mortgage fell last week to 4.76% and for the month
averaged 4.89%. These figures are up from the April low of 4.69% but
the rate had reached a high of 5.36% in early-June. For a 30-year
mortgage, the rate also fell last week to 5.35% after reaching a high
of 5.79% in early-June.<
Interest rates on 15- and 30-year mortgages are
closely correlated (>90%) with the rate on 10-year Treasury
securities. Rates on adjustable 1-Year mortgages averaged 6.71% this
month versus the low near 6.0% during January. Nevertheless, the rate
remained down from the 7.07% peak reached last
fall.
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. The figures for weekly mortgage applications are available in Haver's SURVEYW database.
Sustaining a Global Recovery from the International Monetary Fund can be found here.
MBA Mortgage Applications (3/16/90=100) | 08/14/09 | 08/07/09 | Y/Y | 2008 | 2007 | 2006 |
---|---|---|---|---|---|---|
Total Market Index | 527.0 | 499.0 | 25.7% | 642.9 | 652.6 | 584.2 |
Purchase | 277.7 | 267.2 | -11.6% | 345.4 | 424.9 | 406.9 |
Refinancing | 1,982.5 | 1,853.8 | 91.6% | 2,394.1 | 1,997.9 | 1,634.0 |