U.S. Mortgage Applications Rise

Some improvement in the housing market is apparent in the mortgage applications data. The Mortgage Bankers Association reported that overall mortgage applications rose 5.3% last week for the first gain in four weeks. Applications to purchase a home rose 10.0% w/w to the highest level since early December. During the last ten years, there has been a 42% 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 from 61% before 2008. Applications to refinance increased 2.7% w/w but that recovered only a small portion of recent, sharp declines. They remained off by roughly one-half from the peak last August.

Applications for fixed interest rate mortgage financing inched up 4.6% last week (-15.6% y/y) but remained off nearly one-half from the August peak. Applications for variable-rate financing rose 16.2% (-7.2% y/y).

The effective fixed interest rate on conventional 15-year mortgages fell to 4.33% last week. For 30-year mortgages, the rate fell to 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.