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Economy in Brief

U.S. Weekly Mortgage Applications Rise Again In March
by Tom Moeller March 17, 2010

The Mortgage Bankers Association reported that mortgage applications regained their footing during the last three weeks. Despite a 1.9% decline last week, applications in March are 4.8% higher than in February when they rose 10.8% from January. Applications so far this month are at their highest level since October of last year.

The gain likely has been fueled by an $8,000 Federal tax credit which is due to expire April 30. For last week, applications to purchase a home fell 2.3% but they were 6.2% higher than in February. 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. For mortgage refinancings applications fell by roughly 1.5% for the second week but they still were at their highest in March since last August due to low interest rates.

The effective fixed interest rate on conventional 15-year mortgages fell slightly to 4.60%. For the month, overall rates have been near the six year low. For 30-year mortgages the rate also slipped to 5.17%. 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 rose slightly to 6.83% last week.

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.

Today's testimony by Fed Chairman Bed S. Bernanke, The Federal Reserve's role in bank supervision, can be found here.

MBA Mortgage Applications (SA, 3/16/90=100) 03/12/10 03/05/10 02/26/10 Y/Y 2009 2008 2007
Total Market Index 620.9 633.1 629.9 -29.2% 736.4 642.9 652.6
  Purchase 221.5 226.8 214.5 -13.8 263.5 345.4 424.9
  Refinancing 2,955.9 3,007.2 3,054.3 -34.3 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.60 4.54 4.61 4.77 (03/09) 4.85 5.9 6.2
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