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Economy in Brief

U.S. Mortgage Applications Slip Overall But Purchase Apps Improve
by Tom Moeller July 28, 2010

The Mortgage Bankers Association reported that mortgage applications fell 4.4% last week and reversed roughly half of the prior week's gain. Nevertheless, for July overall applications rose 15.0% from June and by nearly one-half from July '09. Last week's decline was led by a 5.9% decline in refinancings but they remained more than double last year's level. 

Higher applications to purchase a home offset some of that decline with a 2.0% weekly increase. Nevertheless, they still fell 3.6% from June and remained near the lowest level since early-1997. 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 nudged up to 4.33% last week. For 30-year mortgages the rate fell slightly to an average 4.87%, nearly the lowest since the early-1960s. 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 slipped w/w to 7.20% versus 6.74% at the end of last year. 

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.

The latest Beige Book covering regional economic conditions from the Federal Reserve Board can be found here here.

BA Mortgage
Applications
(SA,3/16/90
=100)
7/23/10 7/16/10 7/09/10 7/02/10 Y/Y '09 '08 '07
Total Market Index 720.6 753.5 700.3 721.5 45.5% 736.4 642.9 652.6
 Purchase 172.3 168.9 163.3 168.6 -34.2 263.5 345.4 424.9
 Refinancing 3,918.1 4,161.9 3,831.1 3,944.6 110.4 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.33 4.27 4.38 4.34 4.98
(07/09)
4.85 5.9 6.2
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