Global| Mar 21 2012U.S. Mortgage Applications Drop With Interest Rate Rise
by:Tom Moeller
|in:Economy in Brief
Summary
Higher interest rates are having a quick effect on mortgage loan applications. The index of total mortgage applications fell 7.4% last week to 681.9 (+30% y/y), down for the sixth consecutive week. Applications to refinance fell 9.3% [...]
Higher interest rates are having a quick effect on mortgage loan applications. The index of total mortgage applications fell 7.4% last week to 681.9 (+30% y/y), down for the sixth consecutive week. Applications to refinance fell 9.3% yet still were up by nearly one-half from one year ago. Home purchase applications fell 1.0% (-3.7% y/y), the first decline in four weeks. Applications remained 60% lower than the peak in late-2007. Fixed interest rate loans fell sharply w/w with higher rates.
The effective rate on fixed-interest, conventional 15-year mortgages jumped to 3.57% from 3.44% during the week prior. The effective rate on a 30-year fixed rate loan similarly rose to 4.32%. On a 30-year Jumbo the effective rate was 4.60%. 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 increased to 3.06%, its highest in a 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.
The European Economic and Financial Situation is this morning's speech by Fed Chairman Ben S. Bernanke and it can be found here.
| MBA Mortgage Applications (SA, 3/16/90=100) | 03/16/12 | 03/09/12 | 03/02/12 | Y/Y % | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 681.9 | 736.5 | 754.4 | 30.0 | 572.3 | 659.3 | 736.4 |
| Purchase | 184.6 | 186.5 | 178.7 | -3.7 | 182.6 | 199.8 | 263.5 |
| Refinancing | 3,603.5 | 3,971.1 | 4,141.7 | 45.8 | 2,858.4 | 3,348.1 | 3,509.2 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.57 | 3.44 | 3.45 | 4.34 (3/11) |
3.97 | 4.39 | 4.85 |
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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