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Economy in Brief

U.S. Mortgage Applications Remain Near One-Year Low Though Rates Dip
by Tom Moeller  January 06, 2011

The Mortgage Bankers Association reported that overall mortgage applications continued to stabilize last week. Applications rose 2.3% and reversed the prior week's decline, both of which came on the heels of an 18.6% mid-month plunge. Applications thus remained near the lowest since 2008. Applications to refinance a mortgage inched up 3.9% following several weeks of decline. Applications to purchase a home slipped w/w but they rose 3.3% m/m. 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 mortgage financing increased slightly following two months of sharp decline. Applications for variable-rate financing again fell sharply with the backup in interest rates.

The effective fixed interest rate on conventional 15-year mortgages slipped to 4.48% last week. It still was near the highest level since late-May and up from the October low of 3.88%. For 30-year mortgages the rate slipped to an average 5.04%. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities.

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. The figures for weekly mortgage applications are available in Haver's SURVEYW database.

Why Is The Market Share of Adjustable-Rate Mortgages So Low? from the Federal Reserve Bank of New York is available here here.

BA Mortgage Applications (SA, 3/16/90=100) 12/31/10 12/24/10 12/17/10 Y/Y % 2010 2009 2008
Total Market Index 472.1 461.3 479.9 2.1 659.3 736.4 642.9
 Purchase 199.8 201.4 195.3 -5.8 199.8 263.5 345.4
 Refinancing 2,115.4 2,036.9 2,196.1 7.0 3,348.1 3,509.2 2,394.1
15-Year Mortgage Effective Interest Rate 4.48 4.56 4.52 4.46
4.39 4.85 5.88
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