Mortgage Applications Retraced Prior Week's Jump

The Mortgage Bankers Association reported that last week, total mortgage applications retraced more than half of the prior week's surge and fell 11.3% w/w. Nevertheless, applications so far in June remain 11.0% ahead of the May average which rose 6.5% versus April.

Purchase applications retraced all of the prior week's surge and fell 9.4% w/w. In June, applications are 2.2% ahead of May which rose 3.1% from April. 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 reversed about one third of the prior week's 25.6% w/w jump. In June refis are 22.4% ahead of May.

The effective interest rate on a conventional 30-year mortgage was about unchanged w/w at 5.86% and remained down from the 5.92% averaged during May. The effective rate on a 15-year mortgage rose to 5.54%.

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 latest National Delinquency Survey from the the Mortgage Bankers Association can be viewed here.

Is the Bond Market Irrational? from the Federal Reserve Bank of St. Louis is available here.

Social Security, Saving, and Wealth Accumulation also from the Federal Reserve Bank of St. Louis can be found here.

The price of oil touched $59.37 on Monday then a barrel of West Texas Intermediate crude dropped back yesterday to $56.91. So far in 2005 the price of crude has averaged $52.75, up 26% versus last year's average.

In the US, the average price for unleaded regular gasoline rose to $2.16 per gallon last week versus an average of $2.13 during the prior five weeks. The high was $2.28 in early April.

Wholesale natural gas prices jumped to $7.28/mmbtu (15.6% y/y) last week. During only one week in early April was the price higher.

For the latest Short Term Energy Outlook from the US Department of Energy click here.

After a strong rebound in 2004, the growth in the Taiwanese economy shows signs of moderation. Year-to-year growth in GDP was 2.5% in Q1, the slowest in seven quarters. Today, the Directorate-General of Budgeting, Accounting and Statistics reported employment growth of a respectable 19,000 in May (not seasonally adjusted) following 22,000 in April. But manufacturing jobs declined in those two months and also in March and February, the longest string of reductions since late 2001. This is shallow compared to the outright recession in 2001, but it is a clear break in the previous uptrend. The unemployment rate ticked higher in May to 4.1% from a cyclical low of 4.0% in April; while this is still below the 4.4% of both the year-ago and 2004 average, in the last several months, the rate looks to have stopped falling.

Growth in Taiwan presently is concentrated in service industries. Jobs are increasing the most in what might be termed "support" functions for the economy: travel, finance, real estate and health care.

Taiwan's labor market thus seems to be hesitating, and the behavior of employment in its neighboring nations has been mixed. In Hong Kong, for instance, total employment is up markedly, but as in Taiwan, the growth is in services, as manufacturing continues a longer-run downtrend. In South Korea, employment has strengthened a bit in the last few months, but factory jobs are flat. So Taiwan's recent ambivalent performance is not unique. We'd surmise that rising energy costs and the gains in the vast Chinese economy are pressuring these smaller Asian economies.