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Economy in Brief

U.S. Mortgage Applications Rise As Rates Plumb New Lows
by Tom Moeller  July 18, 2012

Lower interest rates can still stimulate activity in the mortgage market. The Mortgage Bankers Association index of total mortgage applications jumped 16.9% (68.2% y/y) last week, nearly reaching this cycle's high. Applications to refinance rose 21.6% (94.8% y/y) but home purchase applications slipped 0.1% (+4.7% y/y). Applications for fixed interest rate loans rose 17.3% w/w and were up nearly three-quarters y/y. Variable rate loans gained 9.2% w/w and increased 17.3% y/y.

The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.24%, down from the 4.50% high in February of last year. The effective rate on a 30-year fixed rate loan also fell to 3.87%. On a 30-year Jumbo loan, the effective rate was 4.08%. 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 was 2.90% and remained down from its 3.93% high during February of last year.

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) 07/13/12 07/06/12 06/29/12 Y/Y% 2011 2010 2009
Total Market Index 935.4 799.9 816.7 68.2 572.3 659.3 736.4
 Purchase 192.4 192.6 186.5 4.7 182.6 199.8 263.5
 Refinancing 5,314.4 4,369.3 4,524.1 94.8 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.24 3.26 3.32 3.92
3.97 4.39 4.85
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