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Economy in Brief

U.S. Mortgage Applications Improve As Rates Reach New Low
by Tom Moeller   September 21, 2011

Lower interest rates certainly are generating strength in mortgage refinancing, but so far no similar increase in home sales. The total index of mortgage applications rose 0.6% last week to 702.7 (March 16, 1990 = 100). Overall, applications have risen by roughly two-thirds since their early year low. The jump has come as lower interest rates spurred refinancing.

Applications to refinance have doubled since April though they rose just moderately last week. Weekly applications to purchase a home fell w/w and remained near the lowest since 1997. (Data revisions extend back to January.)

The effective rate on fixed-interest, conventional 15-year mortgages dropped to a new record low of 3.57%. The effective rate on 30-year fixed rate loans also fell to a new low of 4.40%. However, the spread between 15- and 30-year loan rates continued wide by historical standards.

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.

MBA Mortgage Applications (SA, 3/16/90=100) 9/16/11 9/9/11 9/2/11 Y/Y % 2010 2009 2008
Total Market Index 702.7 698.8 655.9 -11.1 659.3 736.4 642.9
 Purchase 172.2 180.7 177.5 -3.0 199.8 263.5 345.4
 Refinancing 3,813.2 3,732.4 3,522.6 -12.5 3,348.1 3,509.2 2,394.1
15-Year Mortgage Effective Interest Rate (%) 3.57 3.61 3.62 4.15
4.39 4.85 5.88
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