Global| Jun 09 2010U.S. Mortgage Applications Collapse
by:Tom Moeller
|in:Economy in Brief
Summary
Still in the shadow of the expiration of the government's housing tax credit, the Mortgage Bankers Association reported that mortgage applications fell sharply last week reflecting a collapse in purchase applications. Overall, [...]
Still in the shadow of the expiration of the
government's housing tax credit, the Mortgage Bankers Association
reported that mortgage applications fell sharply last week reflecting a
collapse in purchase applications. Overall, applications fell 12.2% in
early June from the week earlier.
Applications to purchase a home dropped 5.7% w/w for the fifth consecutive week of sharp decline. 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. Mortgage refinancings also fell by 14.3% and reversed increases during the prior two weeks.
The effective fixed interest rate on conventional 15-year mortgages averaged 4.49% during the latest week, a new cycle low. For 30-year mortgages the rate also fell to an average 5.01%. 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 held roughly steady at 7.01%.
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.
Economic and financial conditions and the federal budget is this morning's House testimony by Ben S. Bernanke and it can be found here.
| BA Mortgage Applications (SA,3/16/90=100) | 06/04/10 | 05/28/10 | 05/21/10 | Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 560.9 | 639.0 | 633.5 | -8.2% | 736.4 | 642.9 | 652.6 |
| Purchase | 167.8 | 178.0 | 185.7 | -38.0 | 263.5 | 345.4 | 424.9 |
| Refinancing | 2,859.5 | 3,336.9 | 3,257.4 | 9.7 | 3,509.2 | 2,394.1 | 1,997.9 |
| 15-Year Mortgage Effective Interest Rate (%) | 4.49 | 4.52 | 4.50 | 5.21 (06/09) | 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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