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Economy in Brief

U.S. Mortgage Applications Rise As Interest Rates Fall to Postwar Lows
by Tom Moeller  September 26, 2012

The market for home mortgages continues to heat up with interest rates touching levels not seen since the 1940s. The Mortgage Bankers Association index of total mortgage applications increased 2.8% last week (14.0% y/y) following a 0.2% slip during the prior week. Applications to refinance rose 3.3% w/w (16.1% y/y). Home purchase applications ticked up 0.7% last week (5.9% y/y). Applications for fixed interest rate loans have risen 16.1% y/y as lower mortgage rates are locked in. Conversely, variable rate loan applications have fallen 21.8% y/y.

Mortgage rates continue to reach new lows. The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.08% compared to 3.47% in January. The effective rate on a 30-year fixed rate loan fell back to 3.75% and the effective rate on a Jumbo 30-year loan declined to 3.96%. 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 ticked up to 2.77% 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) 09/21/12 09/14/12 09/07/12 Y/Y% 2011 2010 2009
Total Market Index 875.1 851.6 853.1 14.0 572.3 659.3 736.4
 Purchase 187.0 185.7 193.0 5.9 182.6 199.8 263.5
 Refinancing 4,921.4 4,765.3 4,729.5 16.1 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 3.08 3.12 3.16 3.62
(9/11)
3.97 4.39 4.85
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