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Economy in Brief

U.S. Mortgage Applications Tick Up As Rates Edge Down
by Tom Moeller  July 25, 2012

Lower interest rates continue to generate business for mortgage lenders. The Mortgage Bankers Association index of total mortgage applications rose 0.9%  last week (78.7% y/y) on top of the prior week's 16.9% jump. The figures are close to the high in this cycle. Applications to refinance have led the gain. Last week, they rose 1.8% w/w and have more than doubled since last year. Conversely, home purchase applications fell 3.2% last week (5.4% y/y). Applications for fixed interest rate loans rose 0.9% w/w and were up more than three-quarters y/y. Variable rate loans gained 1.3% w/w and increased 18.7% y/y.

The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.19%, nearly the lowest since the early-1950s and down from the 4.50% high in February of last year. The effective rate on a 30-year fixed rate loan slipped to 3.86%. On a 30-year Jumbo loan, the effective rate was stable w/w at 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 fell to 2.81% and was 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) 07/20/12 07/13/12 07/06/12 Y/Y% 2011 2010 2009
Total Market Index 943.6 935.4 799.9 78.7 572.3 659.3 736.4
 Purchase 186.2 192.4 192.6 5.4 182.6 199.8 263.5
 Refinancing 5,411.6 5,314.4 4,369.3 109.8 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.19 3.24 3.26 3.92
3.97 4.39 4.85
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