Global| Dec 22 2010U.S. Mortgage Applications Reach One-Year Low As Rates Remain High
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that overall mortgage applications plunged 18.6% last week to the lowest since early this year. The decline was led by a 24.6% weekly drop in applications to refinance a mortgage. Applications [...]
The Mortgage Bankers Association reported that overall mortgage applications
plunged 18.6% last week to the lowest since early this year. The decline was led
by a 24.6% weekly drop in applications to refinance a mortgage.
Applications to purchase a home fell moderately during the last two
week's, leaving them up 17.6% from the July low. During the last ten years there
has been a 51% correlation between the y/y change in purchase applications and
the change in new plus existing single family home sales. The correlation has
lessened recently.
The effective fixed interest rate on conventional 15-year mortgages ticked up to 4.54% last week. It was the highest level since late-May and up from the October low of 3.88%. For 30-year mortgages the rate also rose to an average 5.04%. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities.
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.
| BA Mortgage Applications (SA, 3/16/90=100) | 12/17/10 | 12/10/10 | 12/03/10 | Y/Y % | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 479.9 | 589.7 | 603.5 | -19.5 | 736.4 | 642.9 | 652.6 |
| Purchase | 195.3 | 200.3 | 210.9 | -8.4 | 263.5 | 345.4 | 424.9 |
| Refinancing | 2,196.1 | 2,910.9 | 2,932.0 | -24.0 | 3,509.2 | 2,394.1 | 1,997.9 |
| 15-Year Mortgage Effective Interest Rate | 4.54 | 4.53 | 4.23 | 4.64 (12/09) |
4.85 | 5.9 | 6.2 |
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.
