Global| Jan 06 2011U.S. Mortgage Applications Remain Near One-Year Low Though Rates Dip
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that overall mortgage applications continued to stabilize last week. Applications rose 2.3% and reversed the prior week's decline, both of which came on the heels of an 18.6% mid-month plunge. [...]
The Mortgage Bankers Association reported that overall mortgage applications
continued to stabilize last week. Applications rose 2.3% and reversed the prior
week's decline, both of which came on the heels of an 18.6% mid-month plunge.
Applications thus remained near the lowest since 2008. Applications to refinance
a mortgage inched up 3.9% following several weeks of decline. Applications to purchase
a home slipped w/w but they rose 3.3% m/m. 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.
Applications for fixed-rate mortgage financing increased slightly following two months of sharp decline. Applications for variable-rate financing again fell sharply with the backup in interest rates.
The effective fixed interest rate on conventional 15-year mortgages slipped to 4.48% last week. It still was near the highest level since late-May and up from the October low of 3.88%. For 30-year mortgages the rate slipped 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.
Why Is The Market Share of Adjustable-Rate Mortgages So Low? from the Federal Reserve Bank of New York is available here here.
| BA Mortgage Applications (SA, 3/16/90=100) | 12/31/10 | 12/24/10 | 12/17/10 | Y/Y % | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 472.1 | 461.3 | 479.9 | 2.1 | 659.3 | 736.4 | 642.9 |
| Purchase | 199.8 | 201.4 | 195.3 | -5.8 | 199.8 | 263.5 | 345.4 |
| Refinancing | 2,115.4 | 2,036.9 | 2,196.1 | 7.0 | 3,348.1 | 3,509.2 | 2,394.1 |
| 15-Year Mortgage Effective Interest Rate | 4.48 | 4.56 | 4.52 | 4.46 (12/09) |
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.
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