Global| Dec 20 2006Mortgage Applications Reversed Gain
by:Tom Moeller
|in:Economy in Brief
Summary
In a complete reversal of the prior week's gain, the total number of mortgage applications fell 10.2% last week after the 11.5% jump during the prior period, according to the Mortgage Bankers Association. Purchase applications fell [...]
In a complete reversal of the prior week's gain, the total number of mortgage applications fell 10.2% last week after the 11.5% jump during the prior period, according to the Mortgage Bankers Association.
Purchase applications fell 5.9% following an 8.7% rise during the prior week. Notwithstanding the decline, purchase applications remained in December 9.0% above the November average which rose 6.4% from the October level.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance slid 14.6% after two weeks of double digit increase. In December applications to refinance are 9.8% higher than in November.
The effective interest rate on a conventional 30-year mortgage increased again w/w to 6.29% but the 6.22% average so far in December is down versus 6.36% during November. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing also increased to 6.07% but has averaged 5.99% this month versus 6.13% during November. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest 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 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.
Economic Inequality in the United States from the Federal Reserve Bank of San Francisco can be found here.
| MBA Mortgage Applications (3/16/90=100) | 12/15/06 | 12/08/06 | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total Market Index | 647.6 | 721.2 | 8.9% | 708.6 | 735.1 | 1,067.9 |
| Purchase | 436.5 | 463.8 | -3.7% | 470.9 | 454.5 | 395.1 |
| Refinancing | 1,968.8 | 2,304.4 | 38.8% | 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.
