Global| Jan 28 2009U.S. Mortgage Applications Fall as Refinancing Boom Ends
by:Tom Moeller
|in:Economy in Brief
Summary
According to the Mortgage Bankers Association, the total number of mortgage applications fell by more than one-third last week and since their peak two weeks ago are down by almost one-half. Applications had been boosted by lower [...]
According to
the Mortgage Bankers Association, the total number of mortgage
applications fell by more than one-third last week and since their peak
two weeks ago are down by almost one-half. Applications had
been boosted by lower interest rates which have risen 25 to 30 basis
points on average.
The index of applications to refinance a home mortgage fell by more than one-half during the last two periods.
Applications for a mortgage to purchase a home also fell but the decline only reversed an increase during the prior week. Since their peak early last year applications are down 25%.
The effective interest rate on a conventional 15-year
mortgage was roughly stable week-to-week at 5.27% which was up from the
low of 4.92% during the week prior. For a 30-year mortgage, rates also
were roughly stable w/w at 5.43%, up from the low of 5.13% two weeks
ago. Interest rates on 15 and 30 year mortgages are closely correlated
(>90%) with the rate on 10-year Treasury securities. For an
adjustable 1-Year mortgage, the rate also held about steady for the
fourth week at 5.97%, down a full percentage point from this past
Fall.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage. Moreover, during the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The figures for weekly mortgage applications are
available in Haver's SURVEYW
database.
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 Congressional Budget Office Cost Estimate of the American Recovery and Reinvestment Act of 2009 can be found here.
| MBA Mortgage Applications (3/16/90=100) | 01/23/09 | 01/16/09 | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Total Market Index | 732.1 | 1,195.3 | -30.6% | 642.9 | 652.6 | 584.2 |
| Purchase | 294.3 | 303.1 | -18.7% | 345.4 | 424.9 | 406.9 |
| Refinancing | 3,373.9 | 6,491.8 | -33.9% | 2,394.1 | 1,997.9 | 1,634.0 |
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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