Global| Jul 10 2013U.S. Mortgage Applications Decline Further With Elevated Rates
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that total applications for a home mortgage fell 4.0% (-33.3% y/y) last week, extending the decline to 43.6% since early-May. Last week's shortfall reflected a 4.4% drop (-38.4% y/y) in [...]
The Mortgage Bankers Association reported that total applications for a home mortgage fell 4.0% (-33.3% y/y) last week, extending the decline to 43.6% since early-May. Last week's shortfall reflected a 4.4% drop (-38.4% y/y) in applications to refinance an existing loan. Refinancings were down 53.1% since early May. Home purchase mortgage applications declined 3.1% last week (+4.7% y/y), down 8.6% since early May but up 19.0% since year-end.
Interest rates notched higher with the suggestion that the Fed may soon begin to unwind its recent easing. The effective interest rate on a 15-year mortgage increased w/w to 3.86% from 3.75%, up from the early-May low of 2.89%. The effective rate on a 30-year fixed rate loan increased to 4.81% last week while the rate on a Jumbo 30-year loan rose to 4.97%. The 95 basis point spread between 15- and 30-year loan rates was by far a record. The effective interest rate on an adjustable 5-year mortgage increased to 3.60%, up from its low of 2.59% at the beginning of May.
Applications for fixed interest rate loans fell by 34.8% y/y while adjustable rate loan applications slipped 1.4% y/y. The average mortgage loan size was $214,100. The average size loan for home purchases was $264,200 last week while for refinancings it was $186,000.
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 and interest rates are available in Haver's SURVEYW database.
What Caused the Decline in Long-term Yields? from the Federal Reserve Bank of San Francisco is available here
| MBA Mortgage Applications (SA, 3/16/90=100) | 07/05/13 | 06/28/13 | 06/21/13 | Y/Y% | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 533.3 | 555.5 | 629.2 | -33.3 | 813.8 | 572.3 | 659.3 |
| Purchase | 201.7 | 208.2 | 214.8 | 4.7 | 187.8 | 182.6 | 199.8 |
| Refinancing | 2,454.6 | 2,568.3 | 3,041.4 | -43.8 | 4,505.0 | 2,858.4 | 3,348.1 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.86 | 3.75 | 3.66 | 3.23 (7/12) |
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.
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