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Economy in Brief

U.S. Mortgage Applications For Refinancing Remain High
by Tom Moeller  January 25, 2012

The index of total mortgage applications slipped 5.0% last week to 663.1 (March 16, 1990 = 100). The decline followed the prior week's nearly one-quarter jump. As borrowers took advantage of low interest rates, applications to refinance fell just 5.2% (+110.6% y/y) after the prior week's 26.4% leap. They were more than double last year's level. Applications to purchase a home also fell 5.4% (+7.3% y/y) and reversed half of the prior week's gain. Applications remain off by two-thirds from the 2005 high. Borrowers are seeking to lock in low financing costs so applications for fixed-rate loan financing have risen sharply since the Spring. Applications for variable rate mortgages moved sideways.

The effective rate on fixed-interest, conventional 15-year mortgages nudged up to 3.50%. The effective rate on a 30-year fixed rate loan also rose to 4.25%. On a 30-year Jumbo the effective rate was constant at 4.51%. 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 held low at 3.07%, but that was down from 3.14% averaged during December and 3.66% last January.

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) 01/20/12 01/13/12 01/06/12 Y/Y % 2011 2010 2009
Total Market Index 775.6 816.1 663.1 75.6 572.3 659.3 736.4
 Purchase 184.8 195.4 177.1 7.3 182.6 199.8 263.5
 Refinancing 4,265.3 4,500.6 3,560.6 110.6 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.50 3.43 3.49 4.40
3.97 4.39 4.85
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