Recent Updates

  • US: Consumer Sentiment (Jan-prelim), GDP by Industry (Q3)
  • Consumer Sentiment Detail (Jan-prelim)
  • Canada: MSIO, Intl Transactions in Securities (Nov)
  • Ivory Coast: IP (Nov); South Africa: Financial Soundness Indicators (Nov); Turkey: House Sales (Dec), IIP (Nov)
  • Spain: International Trade (Nov)
  • Italy: BOP (Nov)
  • UK: Retail Sales (Dec)
  • Euro area: Balance of Payments (Nov)
  • more updates...

Economy in Brief

Mortgage Applications Drop Sharply With Refinancing
by Tom Moeller   November 17, 2010

The Mortgage Bankers Association reported that a 14.4% w/w decline in mortgage applications lowered them to the lowest level since July. Nevertheless, applications remained up more than one-third from last year's low.  Last week's total decline reflected a 16.5% w/w drop in applications to refinance a mortgage. Applications to purchase a home fell 5.0% and reversed the prior week's increase. That left applications off by roughly one-third from last year, placing them near the lowest level since 1995. 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 rose to 4.09% last week with selling in the Treasury market. It was the highest level since late-September. For 30-year mortgages the rate also rose to an average 4.69%, still 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 moved sideways w/w to 7.17% 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.

BA Mortgage Applications (SA, 3/16/90=100) 11/12/10 11/05/10 10/29/10 Y/Y % 2009 2008 2007
Total Market Index 713.6 833.3 787.3 13.4 736.4 642.9 652.6
 Purchase 179.2 188.7 178.9 -12.0 263.5 345.4 424.9
 Refinancing 3,831.1 4,587.7 4,328.8 23.0 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.09 3.92 3.91 4.59
(11/09)
4.85 5.9 6.2
close
large image