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Economy in Brief

U.S. Mortgage Applications Rise In June As Interest Rates Fall
by Tom Moeller  June 29, 2011

Overall mortgage applications fell 2.7% last week following the prior week's 5.9% shortfall. Nevertheless, strength earlier in June raised the monthly average 4.6% from May. Applications to refinance a mortgage led that increase. Though they fell 2.6% last week after a 7.2% decline, the June average rose 7.8% from May. Applications to purchase a home have been weaker. Declines during the last two weeks left the monthly average down 3.4% from May.

Homebuyers leaned toward fixed rate loans last month, given the degree that interest rates have fallen. Though they fell during the last two weeks, the monthly average for fixed interest rate mortgage financing rose 4.8% this month following May's 14.5% jump. Applications for variable-rate financing rose a lesser 0.9% after May's 11.5% increase.

The effective fixed-interest rate on conventional 15-year mortgages slipped to 3.92% last week, near the record low of 3.88% reached last October. For 30-year mortgages, the rate was 4.70%. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities. The effective rate on a 1-year adjustable rate mortgage was 7.07%.

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.

BA Mortgage Applications (SA, 3/16/90=100) 6/24/11 6/17/11 6/10/11 Y/Y % 2010 2009 2008
Total Market Index 534.9 549.9 584.6 -20.9 659.3 736.4 642.9
 Purchase 180.3 185.8 191.1 5.8 199.8 263.5 345.4
 Refinancing 2,604.4 2,675.2 2,883.7 -27.9 3,348.1 3,509.2 2,394.1
15-Year Mortgage Effective Interest Rate (%) 3.92 3.96 3.94 4.42
4.39 4.85 5.88
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