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Economy in Brief

U.S. Weekly Mortgage Applications Slip
by Tom Moeller February 10, 2010

The Mortgage Bankers Association reported that mortgage applications slipped 1.2% last week after a 21.0% jump at the end of January. As a result, applications began February up sharply from last month.   

Applications to refinance mortgages increased 1.4% last week and were double the June low due to rate declines. Applications to purchase a home have not shared that degree of strength. They fell 7.0% last week after declining in January from December. The volatility in the numbers likely reflects the expiration of an up-to $8,000 Federal tax credit for first-time homebuyers which was extended to April. During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales. The correlation has lessened recently.

The effective fixed interest rate on conventional 15-year mortgages slipped last week to 4.57%. That equaled the November low and was down from the June average of 5.21%. For 30-year mortgages the rate ticked up last week to 5.16% from a November average of 5.06%. Rates reached a high of 5.79% in early-June. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities. Rates on adjustable one-year mortgages fell to 6.64% last week from a November average of 6.81%. 

Since a December low, the number of fixed-rate mortgages has risen by one third and roughly equaled the rise in adjustable-rate mortgage applications. 

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.

Federal Reserve's exit strategy is this morning's House testimony by Fed Chairman Ben S. Bernanke and it can be found here.

MBA Mortgage Applications (SA, 3/16/90=100) 02/05/10 01/29/10 Y/Y 2009 2008 2007
Total Market Index 613.1 620.7 2.1% 736.4 642.9 652.6
  Purchase 221.2 237.8 -6.2 263.5 345.4 424.9
  Refinancing 2,893.9 2,854.8 6.3 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.57 4.62 5.07 (02/09) 4.85 5.9 6.2
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