Global| May 17 2006Mortgage Applications Recovered
by:Tom Moeller
|in:Economy in Brief
Summary
Last week, the total number of mortgage applications recovered most of the prior week's decline with a 4.6% gain. The rise lifted the average level in May 0.3% above the April average. Purchase applications rose 2.4% following a 3.9% [...]
Last week, the total number of mortgage applications recovered most of the prior week's decline with a 4.6% gain. The rise lifted the average level in May 0.3% above the April average.
Purchase applications rose 2.4% following a 3.9% w/w decline the prior week. As a result, purchase applications in May are 2.3% ahead of April which rose 1.1% versus March.
During the last ten years there has been a negative 80% correlation between the interest rate level on 30-year financing and purchase applications while during those years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance recovered about all of the prior week's decline with an 8.4% rise. Nevertheless, the May level is 2.7% below the April average which fell 4.1% from March.
The effective interest rate on a conventional 30-year mortgage jumped to 6.90% from 6.84% the prior week and the rate on 15-year financing increased to 6.55%. Rates have risen roughly 50 basis points since year end 2005. 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.
| MBA Mortgage Applications (3/16/90=100) | 05/12/06 | 05/05/06 | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total Market Index | 588.0 | 562.1 | -15.9% | 708.6 | 735.1 | 1,067.9 |
| Purchase | 426.7 | 416.5 | -9.1% | 470.9 | 454.5 | 395.1 |
| Refinancing | 1,546.8 | 1,427.4 | -24.1% | 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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