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Economy in Brief

U.S. Weekly Mortgage Applications Firmed In March
by Tom MoellerMarch 31, 2010

The Mortgage Bankers Association reported that while applications for refinancing were weak, purchase applications firmed during March. Overall, applications rose 2.5% this month after a 10.8% increase in February.

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 rose 8.8% in March but that followed declines during the prior two months. 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 were unchanged in March but they still have trended higher since mid-2009.

The effective fixed interest rate on conventional 15-year mortgages held roughly steady at 4.59% last week. For the month, overall rates have been near the six year low. For 30-year mortgages the rate also were steady at 5.19%. 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 6.95% last week.

MBA Mortgage Applications (SA, 3/16/90=100) 03/26/10 03/19/10 03/12/10 Y/Y 2009 2008 2007
Total Market Index 602.8 595.0 620.9 -49.5% 736.4 642.9 652.6
  Purchase 243.0 227.5 221.5 -9.3 263.5 345.4 424.9
  Refinancing 2,707.8 2,744.7 2,955.9 -59.0 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.59 4.53 4.60 4.77 (03/09) 4.85 5.9 6.2
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