Global| Sep 19 2012U.S. Mortgage Applications Improve As Interest Rates Reach New Lows
by:Tom Moeller
|in:Economy in Brief
Summary
Lower interest rates are fueling activity in the market for home mortgages. The Mortgage Bankers Association index of total mortgage applications slipped 0.2% last week (+21.2% y/y) but that followed an 11.1% increase during the prior [...]
Lower interest rates are fueling activity in the market for home mortgages. The Mortgage Bankers Association index of total mortgage applications slipped 0.2% last week (+21.2% y/y) but that followed an 11.1% increase during the prior week. Nevertheless, applications remained 10.0% below the late-July high. Applications to refinance rose 0.8% w/w (25.0% y/y) after the prior week's 11.9% rise. Home purchase applications fell 3.8% last week (+7.8% y/y) on the heels of the prior week's 8.1% gain. Applications for fixed interest rate loans have risen by one-quarter y/y as lower mortgage rates are locked in. Conversely, variable rate loan applications have fallen 15.8% y/y.
Mortgage rates are plumbing new lows.The effective rate on fixed-interest, conventional 15-year mortgages fell w/w to 3.12% compared to 3.47% in January. The effective rate on a 30-year fixed rate loan fell back to 3.85% and the effective rate on a Jumbo 30-year loan declined to 4.09%. 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 a new low of 2.72% and was down from its 3.93% high during February of last year.
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) | 09/14/12 | 09/07/12 | 08/31/12 | Y/Y% | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 851.6 | 853.1 | 767.6 | 21.2 | 572.3 | 659.3 | 736.4 |
| Purchase | 185.7 | 193.0 | 178.6 | 7.8 | 182.6 | 199.8 | 263.5 |
| Refinancing | 4,765.3 | 4,729.5 | 4,224.8 | 25.0 | 2,858.4 | 3,348.1 | 3,509.2 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.12 | 3.16 | 3.19 | 3.62 (9/11) |
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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