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Economy in Brief

U.S. Mortgage Applications Improve As Interest Rates Reach New Lows
by Tom Moeller  September 19, 2012

Lower interest rates are fueling activity in the market for home mortgages. The Mortgage Bankers Association index of total mortgage applications slipped 0.2% last week (+21.2% y/y) but that followed an 11.1% increase during the prior week. Nevertheless, applications remained 10.0% below the late-July high. Applications to refinance rose 0.8% w/w (25.0% y/y) after the prior week's 11.9% rise. Home purchase applications fell 3.8% last week (+7.8% y/y) on the heels of the prior week's 8.1% gain. Applications for fixed interest rate loans have risen by one-quarter y/y as lower mortgage rates are locked in. Conversely, variable rate loan applications have fallen 15.8% y/y.

Mortgage rates are plumbing new lows.The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.12% compared to 3.47% in January. The effective rate on a 30-year fixed rate loan fell back to 3.85% and the effective rate on a Jumbo 30-year loan declined to 4.09%. 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 a new low of 2.72% 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) 09/14/12 09/07/12 08/31/12 Y/Y% 2011 2010 2009
Total Market Index 851.6 853.1 767.6 21.2 572.3 659.3 736.4
 Purchase 185.7 193.0 178.6 7.8 182.6 199.8 263.5
 Refinancing 4,765.3 4,729.5 4,224.8 25.0 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.12 3.16 3.19 3.62
(9/11)
3.97 4.39 4.85
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