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Economy in Brief

U.S. Weekly Mortgage Applications Fall As Interest Rates Rise
by Tom Moeller April 07,2010

The Mortgage Bankers Association reported that mortgage applications began to show the effects of recent increases in interest rates. Last week applications fell 11.0% from late-March to the lowest level since January.

The decline reflected a drop in applications for mortgage refinancing. The 16.9% w/w drop, to the lowest level since the first week of January, reversed an earlier strengthening trend.

Applications to purchase a home ticked up 0.2% following two weeks of large increase. Nevertheless, purchase applications were down 18.2% y/y. 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.

Applications for fixed-rate mortgages fell 11.9% (-59.1% y/y) while applications for adjustable rate loans rose 5.7% and increased by three-quarters from last year.

The effective fixed interest rate on conventional 15-year mortgage moved upward to 4.77%, the highest since early-January. For 30-year mortgages the rate also moved higher to 5.44%. Rates reached a high of 5.79% in early-June of last year. 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 to 7.11%, its highest since mid-2008.

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.

Mortgage choice and the pricing of fixed-rate and adjustable-rate mortgages from the Federal Reserve Bank of San Francisco can be found here.

The minutes to the latest meeting of the Federal Open Market Committee can be found here.

MBA Mortgage Applications (SA, 3/16/90=100) 04/02/10 03/26/10 03/19/10 Y/Y 2009 2008 2007
Total Market Index 536.3 602.8 595.0 -57.1% 736.4 642.9 652.6
  Purchase 243.6 243.0 227.5 -18.2 263.5 345.4 424.9
  Refinancing 2,250.6 2,707.8 2,744.7 -67.0 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.77 4.59 4.53 4.72 (04/09) 4.85 5.9 6.2
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