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Economy in Brief

U.S. Mortgage Applications Rise Again With Refinancing Surge
by Tom Moeller  February 8, 2012

The index of total mortgage applications rose 7.5% last week to 810.0 (March 16, 1990 = 100), nearly the highest since late 2010. The rise followed two weeks of moderate decline. Continuing to take advantage of low interest rates, borrowers raised applications to refinance 9.4% (115.7% y/y) after two weeks of decline. They were more than double last year's level. Applications to purchase a home were roughly unchanged (-2.3% y/y) following two weeks of sharp decline. 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 slipped to its low of 3.43%. The effective rate on a 30-year fixed rate loan also fell to 4.18%. On a 30-year Jumbo the effective rate also fell to 4.41%. 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 dropped to 3.05%, but that was down from 3.14% averaged during December and 3.93% last February.

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) 02/03/12 01/27/12 01/20/12 Y/Y % 2011 2010 2009
Total Market Index 810.0 753.3 775.6 74.3 572.3 659.3 736.4
 Purchase 181.9 181.7 184.8 -2.3 182.6 199.8 263.5
 Refinancing 4,500.7 4,113.8 4,265.3 115.7 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.43 3.47 3.50 4.50
3.97 4.39 4.85
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