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Economy in Brief

U.S. Mortgage Interest Rates Reach Two-Year High
by Tom Moeller  August 28, 2013

The Mortgage Bankers Association reported that the recent increase in mortgage interest rates gained momentum last week. The 14 basis point w/w increase was the largest in two months. Moreover, the effective interest rate on a 15-year mortgage of 3.93% was the highest level since July 2011. That compared to the early-May low of 2.89%. The effective rate on a 30-year fixed rate loan also increased sharply last week to 4.92% while the rate on a Jumbo 30-year loan rose to 4.88%. The effective interest rate on an adjustable 5-year mortgage rose further w/w to 3.64%, up from its low of 2.59% at the beginning of May.

Accompanying the rise in financing rates was a 2.5% decline (-44.1% y/y) last week in the Mortgage Bankers' Total Mortgage Market Index. Applications to refinance an existing loan declined another 5.4% (-56.9% y/y) and were down by two-thirds from the September peak. Home purchase mortgage applications moved 2.4% higher (5.3% y/y) but they've fallen 14.1% since the early-May peak.

Applications for fixed interest rate loans fell by 45.9% y/y while adjustable rate loan applications were off 5.4% y/y. The average mortgage loan size was $213,00. The average size loan for home purchases was $253,300 last week while for refinancings it was $186,300.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database. 

MBA Mortgage Applications (SA, 3/16/90=100) 08/23/13 08/16/13 08/09/13 Y/Y% 2012 2011 2010
Total Market Index 439.2 450.4 471.9 -44.1 813.8 572.3 659.3
 Purchase 189.4 184.9 182.7 5.3 187.8 182.6 199.8
 Refinancing 1,871.8 1,979.6 2,145.3 -56.9 4,505.0 2,858.4 3,348.1
15-Year Mortgage Effective Interest Rate (%) 3.93 3.79 3.69 3.22
3.25 3.97 4.39
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