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Economy in Brief

U.S. Mortgage Loan Applications Trend Lower as Rates Rise
by Tom Moeller  December 21, 2016

The Mortgage Bankers Association reported that its total Mortgage Market Volume Index increased 2.5% last week (-9.5% y/y), but made up just part of the prior week's 4.0% decline. Since their peak early in July, applications have fallen by roughly one-third. Refinancing applications gained 3.0% w/w, yet were off by one-half versus the level early in July. Purchase applications increased 2.7% (0.9% y/y), but were 6.8% below the high early in June.

The effective interest rate on a 15-year mortgage rose to 3.73%, up from the July low of 2.97%. The effective rate on a 30-year fixed-rate loan rose to 4.52%, up from the 3.70% low in early-July. The rate on a Jumbo 30-year loan increased to 4.43%. For adjustable 5-year mortgages, the effective interest rate of 3.54% was higher than 2.87% roughly six months ago.

The average mortgage loan size increased to $273,100, up 0.8% y/y. For purchases, it increased to $312,000 (3.5% y/y); for refinancings, it was little changed at $244,900 (-3.2% y/y).

Applications for fixed interest rate loans fell 9.9% y/y, while adjustable-rate loan applications declined 3.0% y/y.

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. The 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) 12/16/16 11/09/16 12/02/16 Y/Y 2015 2014 2013
Total Market Index 2.5 -4.0 -0.7 -9.5 17.9 -41.4 -24.2
 Purchase 2.7 -3.3 0.4 0.9 15.5 -12.9 5.2
 Refinancing 3.0 -3.6 -0.7 -17.8 19.7 -52.8 -31.9
15-Year Mortgage Effective Interest Rate (%) 3.73 3.62 3.62 3.50 (Dec. '15) 3.37 3.54 3.42
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