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Economy in Brief

U.S. Mortgage Applications For Refinancing Surge
by Tom Moeller  April 18, 2012

Lower interest rates finally prompted a gain in mortgage applications. The Mortgage Bankers Association for total mortgage applications rose 6.9% w/w to 725.4 (55.2% y/y). The increase raised applications to the highest level in five weeks. Applications to refinance led the surge with a 13.5% jump last week and they've doubled during the last year. Fewer home purchase applications offset this gain with an 11.2% w/w decline (-14.4% y/y). Nevertheless, so far this month they've risen 12.0% from the February average. Fixed interest rate loan applications remained down sharply from the January peak and variable rate loan applications have moved sideways.

The effective rate on fixed-interest, conventional 15-year mortgages returned to its recent low of 3.43%, fully reversing the increase through the end of last month. The effective rate on a 30-year fixed rate loan also returned to its low of 4.18%. On a 30-year Jumbo the effective rate was a lower 4.47%. 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 neared its low with a decline to 2.96%.

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.

Increased Real House Price Volatility Signals Break from Great Moderation from the Federal Reserve Bank of Dallas is available here.

MBA Mortgage Applications (SA, 3/16/90=100) 04/13/12 04/06/12 03/30/12 Y/Y % 2011 2010 2009
Total Market Index 725.4 678.8 695.7 55.2 572.3 659.3 736.4
 Purchase 180.5 203.3 204.4 6.1 182.6 199.8 263.5
 Refinancing 3,936.3 3,467.3 3,576.8 99.3 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.43 3.46 3.50 4.33
3.97 4.39 4.85
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