Global| Oct 13 2010Mortgage Applications Surge Spurred By Higher Refinancings
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that mortgage applications surged by 14.6% last week to the highest level since May 2009. Last week's total increase was led by a 21.0% w/w jump in applications to refinance a mortgage. They [...]
The Mortgage Bankers Association reported that mortgage applications surged
by 14.6% last week to the highest level since May 2009. Last week's total
increase was led by a 21.0% w/w jump in applications to refinance a
mortgage. They were up by one-half versus last year with the decline in
interest rates. Applications to purchase a home fell 8.5% and
reversed the prior week's increase. That left applications off by roughly
one-third from last year at the lowest level since 1995. 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 fell to 3.88% last week. For 30-year mortgages the rate fell to an average 4.41%, 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. Rates on adjustable one-year mortgages ticked down w/w to 7.10% versus 6.74% at the end of last year.
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) | 10/08/10 | 10/01/10 | 09/24/10 | Y/Y % | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 897.2 | 782.6 | 784.0 | 20.8 | 736.4 | 642.9 | 652.6 |
| Purchase | 181.8 | 198.7 | 181.8 | -37.5 | 263.5 | 345.4 | 424.9 |
| Refinancing | 5,060.3 | 4,180.8 | 4,288.3 | 50.0 | 3,509.2 | 2,394.1 | 1,997.9 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.88 | 4.01 | 4.05 | 4.68 (10/09) |
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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