Global| Dec 08 2010Mortgage Applications For Refinancing Plummet As Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that a 0.9% w/w downtick in mortgage applications after a $16.5B plunge lowered them to the lowest since June. Last week's total decline reflected a 1.4% w/w drop in applications to refinance [...]
The Mortgage Bankers Association reported that a 0.9% w/w downtick in
mortgage applications after a $16.5B plunge lowered them to the lowest since June.
Last week's total decline reflected a 1.4% w/w drop in applications to refinance
a mortgage. Applications to purchase a home increased 1.8%, leaving them
up roughly one-quarter from the July low. During the last ten years there has
been a 51% correlation between the y/y change in purchase applications and the
change in new plus existing single family home sales. The correlation has
lessened recently.
The effective fixed interest rate on conventional 15-year mortgages rose to 4.23% last week with selling in the Treasury market. It was the highest level since late-August. For 30-year mortgages the rate also rose to an average 4.85%, still nearly the lowest since the early-1960s. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities.
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. Visit the Mortgage Bankers Association site here. The figures for weekly mortgage applications are available in Haver's SURVEYW database.
| BA Mortgage Applications (SA, 3/16/90=100) | 12/03/10 | 11/26/10 | 11/199/10 | Y/Y % | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 603.5 | 608.8 | 728.8 | -9.3 | 736.4 | 642.9 | 652.6 |
| Purchase | 210.9 | 207.2 | 205.0 | -12.7 | 263.5 | 345.4 | 424.9 |
| Refinancing | 2,932.9 | 2,974.4 | 3,793.6 | -8.0 | 3,509.2 | 2,394.1 | 1,997.9 |
| 15-Year Mortgage Effective Interest Rate | 4.23 | 4.13 | 4.09 | 4.62 (12/09) |
4.85 | 5.9 | 6.2 |
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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