Global| Jun 26 2013U.S. Mortgage Applications Continue Lower As Interest Rates Surge
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that total applications for a home mortgage fell 3.0% w/w, extending the declines of the prior six weeks. The latest level was down by one-third since early-May. Last week's decline reflected [...]
The Mortgage Bankers Association reported that total applications for a home mortgage fell 3.0% w/w, extending the declines of the prior six weeks. The latest level was down by one-third since early-May. Last week's decline reflected a 5.2% drop (-38.4% y/y) in applications to refinance an existing loan. Refinancings were down 41.8% since early May. Home purchase mortgage applications increased 2.1% last week (15.9% y/y), up 26.7% since year end.
Evidence of a firming economy is raising interest rates. The effective interest rate on a 15-year mortgage jumped w/w to 3.66% from 3.30%, up from the early-May low of 2.89%. The effective rate on a 30-year fixed rate loan increased to 4.57% last week while the rate on a Jumbo 30-year loan was 4.60%. The 91 basis point spread between 15- and 30-year loan rates was a record. The effective interest rate on an adjustable 5-year mortgage increased to 3.20%, up from its low of 2.59% at the beginning of May.
Applications for fixed interest rate loans fell by 30.3% y/y while adjustable rate loan applications rose 20.0% y/y. The average mortgage loan size was $222,500. The average size loan for home purchases was $266,800 last week while for refinancings it was $201,000.
The survey covers over 75 percent of all U.S. retail residential
mortgage applications, and has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.
Base period and value for all indexes is March 16, 1990=100.
The figures for weekly mortgage applications are available in Haver's SURVEYW
database.
Why Financial Stability is a Necessary Prerequisite for an Effective Monetary Policy from the Federal Reserve Bank of New York can be found here.
| MBA Mortgage Applications (SA, 3/16/90=100) | 06/21/13 | 06/14/13 | 06/07/13 | Y/Y% | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 629.2 | 648.9 | 670.7 | -28.1 | 813.8 | 572.3 | 659.3 |
| Purchase | 214.8 | 210.4 | 217.0 | 15.9 | 187.8 | 182.6 | 199.8 |
| Refinancing | 3,041.4 | 3,208.5 | 3,322.3 | -38.4 | 4,505.0 | 2,858.4 | 3,348.1 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.66 | 3.30 | 3.32 | 3.22 (6/12) |
3.25 | 3.97 | 4.39 |
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.
More Economy in Brief
