Global| Dec 21 2011U.S. Mortgage Applications Decline; Rates Plumb New Low
by:Tom Moeller
|in:Economy in Brief
Summary
Activity in the mortgage market continues to be buoyed by efforts to lower financing costs. The index of total mortgage applications slipped 2.6% last week to 659.3 (March 16, 1990 = 100). The decline would have been greater were it [...]
Activity in the mortgage market continues to be buoyed by efforts to lower financing costs. The index of total mortgage applications slipped 2.6% last week to 659.3 (March 16, 1990 = 100). The decline would have been greater were it not for refinancing activity. Applications to refinance slipped just 1.6% (+60.1% y/y) following two weeks of strong increase. They remained near the highest level since early-November. Applications to purchase a home fell a greater 4.9% (-7.0% y/y). Though applications so far this month have risen versus October, they remain off by two-thirds from the 2005 high. As borrowers seek to lock in low financing costs, applications for fixed-rate loan financing fell a slight 2.1% (+39.0%) after two weeks of strong gain. Applications for variable rate mortgages fell 11.1% (+12.8% y/y) and mostly reversed the gains of early in the month.
The effective rate on fixed-interest, conventional 15-year mortgages fell to a new low of 3.49%. The effective rate on 30-year fixed rate loans slipped to 4.22%. On a 30-year Jumbo the effective rate was 4.55%. Though it's narrowed slightly of late, the spread between 15- and 30-year loan rates continued wide by historical standards. The effective interest rate on an adjustable 5-year mortgage fell to 3.07% from 3.18% averaged last month.
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. The figures for weekly mortgage applications are available in Haver's SURVEYW database.
| MBA Mortgage Applications (SA, 3/16/90=100) | 12/16/11 | 12/9/11 | 12/2/11 | Y/Y % | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 659.3 | 677.0 | 650.4 | 37.4 | 659.3 | 736.4 | 642.9 |
| Purchase | 181.6 | 190.9 | 208.0 | -7.0 | 199.8 | 263.5 | 345.4 |
| Refinancing | 3,516.8 | 3,573.7 | 3,268.7 | 60.1 | 3,348.1 | 3,509.2 | 2,394.1 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.49 | 3.57 | 3.65 | 4.46 (12/10) |
4.39 | 4.85 | 5.88 |
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
