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Economy in Brief

U.S. Mortgage Applications Jump As Financing Rates Tumble
by Tom Moeller  October 3, 2012

Maybe 3.0% was some kind of threshold, but mortgage refinancings jumped as the rate on fixed rate, 15-year loans fell below it. The Mortgage Bankers Association index of total mortgage applications gained 16.6% last week (38.8% y/y) led by a 19.6% spurt (46.5% y/y) in applications to refinance an existing loan. Home purchase applications gained a lesser 3.9% last week (10.8% y/y). Applications for fixed interest rate loans have risen 42.5% y/y as lower mortgage rates are locked in. Conversely, adjustable rate loan applications have fallen 14.4% y/y.

Mortgage rates plummeted last week. The effective rate on fixed-interest, conventional 15-year mortgages dropped eleven basis points w/w to 2.97% compared to 3.47% in January. The effective rate on a 30-year fixed rate similarly dropped sharply to 3.63% and the effective rate on a Jumbo 30-year loan declined to 3.91%. 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 slipped to 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) 09/28/12 09/21/12 09/14/12 Y/Y% 2011 2010 2009
Total Market Index 1,020.4 875.1 851.6 38.8 572.3 659.3 736.4
 Purchase 194.2 187.0 185.7 10.8 182.6 199.8 263.5
 Refinancing 5,888.0 4,921.4 4,765.3 46.5 2,858.4 3,348.1 3,509.2
15-Year Mortgage Effective Interest Rate (%) 2.97 3.08 3.12 3.62
3.97 4.39 4.85
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