Global| Jul 06 2006Mortgage Applications Up, Rates Fell
by:Tom Moeller
|in:Economy in Brief
Summary
The total number of mortgage applications rose 5.9% last week and recovered about all of the prior week's sharp decline. For the month of June, the average number of applications fell 1.5% from May. A 6.5% increase in purchase [...]
The total number of mortgage applications rose 5.9% last week and recovered about all of the prior week's sharp decline. For the month of June, the average number of applications fell 1.5% from May.
A 6.5% increase in purchase applications recovered all of the prior week's decline but nevertheless left the June average 0.8% below May which fell 0.8% from April.
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 rose 5.0% after a 7.5% drop the prior week. Refis during all of June were 3.1% below the May average.
The effective interest rate on a conventional 30-year mortgage reversed half of the prior week's rise with a six basis point decline to 7.02%. The rate on 15-year financing reversed most of the prior week's gain with a seven basis point decline to 6.68%. 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 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) | 06/30/06 | 06/23/06 | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total Market Index | 561.0 | 529.6 | -34.3% | 708.6 | 735.1 | 1,067.9 |
| Purchase | 414.2 | 389.0 | -20.5% | 470.9 | 454.5 | 395.1 |
| Refinancing | 1,423.9 | 1,356.0 | -48.9% | 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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