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Economy in Brief

U.S. Mortgage Applications Drop Precipitously From Early-Month High
by Tom Moeller November 30, 2011

Let's talk about a reversal. The index of total mortgage applications fell 11.7% last week to 576.4 (March 16, 1990 = 100). Its was the third consecutive weekly decline and reversed all of the gains since late-July. Since early this month applications have fallen by nearly one-quarter.

Applications to refinance have fallen the hardest. They dropped 15.3% last week. They were the lowest since late-July and down by one-third from the late-September high. Relatively well behaved were weekly applications to purchase a home which slipped just 0.8% w/w and remained near the recent high. However, they are still off almost two-thirds versus before the recession. Applications for a fixed-rate mortgage fell for the third straight week (-5.2% y/y) while variable rate financings were off to a lesser degree during recent weeks (-7.2% y/y).

The effective rate on fixed-interest, conventional 15-year mortgages held steady w/w at 3.69%, just above the record low of 3.57%. The effective rate on 30-year fixed rate loans held at 4.35%. On a 30-year Jumbo the effective rate was 4.68%. 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 3.15% 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.

The Failure to Forecast the Great Recession from the Federal Reserve Bank of New York is available here.

MBA Mortgage Applications (SA, 3/16/90=100) 11/25/11 11/18/11 11/11/11 Y/Y % 2010 2009 2008
Total Market Index 576.4 652.5 660.5 -5.3 659.3 736.4 642.9
 Purchase 192.1 193.6 178.9 -7.3 199.8 263.5 345.4
 Refinancing 2,834.5 3,344.7 3,483.9 -14.7 3,348.1 3,509.2 2,394.1
15-Year Mortgage Effective Interest Rate (%) 3.69 3.71 3.65 4.06
4.39 4.85 5.88
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