Global| Mar 22 2006Mortgage Applications Down Further
by:Tom Moeller
|in:Economy in Brief
Summary
The total number of mortgage applications slumped 1.6% last week and continued the downtrend which began the middle of last year. Since the weekly peak last June, applications are down 36.3%. In March, applications are 2.4% below the [...]
The total number of mortgage applications slumped 1.6% last week and continued the downtrend which began the middle of last year. Since the weekly peak last June, applications are down 36.3%. In March, applications are 2.4% below the February average which fell 6.3% m/m.
Purchase applications reversed the prior week's gain and fell 2.3%. Versus the weekly peak last May purchase applications are down 25.2% and the March level is down 2.0% from the February average.
During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance were off another 0.6% on top of the prior week's 1.9% drop. Since the peak last June refis are down 46.9% and the March level is 2.6% below the February average which fell 2.0% from January.
The effective interest rate on a conventional 30-year mortgage jumped for the second week. The nine basis point rise in the effective rate on a 15-year mortgage to 6.36% was to the highest level since mid-2002. The ten basis point rise in the effective rate on a 30 year mortgage pulled it to 6.65%. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities and during the last ten years there has been a (negative) 82% correlation between purchase applications and the effective rate on a 30-Year mortgage.
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 accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.
The Yield Curve and Predicting Recessions from the Federal Reserve Board can be found here.
| MBA Mortgage Applications (3/16/90=100) | 03/17/06 | 03/10/06 | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total Market Index | 565.0 | 5574.4 | -14.2% | 708.6 | 735.1 | 1,067.9 |
| Purchase | 393.6 | 403.0 | -11.8% | 470.9 | 454.5 | 395.1 |
| Refinancing | 1,574.5 | 1,583.6 | -30.2% | 2,092.3 | 2,366.8 | 4,981.8 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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