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Economy in Brief

U.S. Mortgage Applications Jump With Lower Interest Rates
by Tom Moeller   November 9, 2011

Lower interest rates continued to have their effect on the mortgage market last week. The index of total mortgage applications jumped 10.3% to 734.3 (March 16, 1990 = 100) and recovered the October declines. Applications started this month 8.5% above the October average which fell 1.8% from September. Overall, applications have risen more-than 80% since their early-year low. The jump has come as lower interest rates spurred refinancing.

Applications to refinance rose 12.1% last week and have more-than-doubled since April. Weekly applications to purchase a home also rose 4.7% w/w to the highest level in three months. However, they are still off almost two-thirds versus before the recession. Applications for a fixed-rate mortgage rose 10.3% w/w (-12.2% y/y) and for a variable rate mortgage they rose 9.8% w/w (-6.5% y/y).

The effective rate on fixed-interest, conventional 15-year mortgages slipped back to 3.65%, just above the record low of 3.57%. The effective rate on 30-year fixed rate loans fell to 4.34%. On a 30-year Jumbo the effective rate was 4.70%. Though it's narrowed slightly of late, the spread between 15- and 30-year loan rates continued wide by historical standards. The effective interest rate on an adjustable 5-year mortgage fell to 3.18% from 3.26% averaged last month.

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.

This morning's remarks by Fed Chairman Ben S. Bernanke on small business can be found here.

MBA Mortgage Applications (SA, 3/16/90=100) 11/4/11 10/28/11 10/21/11 Y/Y % 2010 2009 2008
Total Market Index 734.3 665.6 664.0 -11.9 659.3 736.4 642.9
 Purchase 183.1 174.8 171.7 -3.0 199.8 263.5 345.4
 Refinancing 3,967.5 3,539.3 3,546.7 -13.5 3,348.1 3,509.2 2,394.1
15-Year Mortgage Effective Interest Rate (%) 3.65 3.75 3.73 4.06
(11/10)
4.39 4.85 5.88
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