Global| Jun 22 2011U.S. Mortgage Applications To Refinance Are Firm With Record Low Interest Rates
by:Tom Moeller
|in:Economy in Brief
Summary
Overall mortgage applications fell 5.9% last week. However, since the decline followed a 13.0% increase during the week prior, applications for the month so far have risen 5.3% from May. Applications to refinance a mortgage led that [...]
Overall mortgage applications fell 5.9% last week. However, since the decline followed a 13.0% increase during the week prior, applications for the month so far have risen 5.3% from May. Applications to refinance a mortgage led that increase. Though they fell 7.2% last week, June's level is up 8.5% from May. Working the other way, applications to purchase a home fell 2.8% w/w and for the month are down 2.6% from May. 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.
Locking in a low interest rate is borrowers' current emphasis. Applications for fixed interest rate mortgage financing fell last week, but for the month have risen 5.5% following May's 14.5% jump. Applications for variable-rate financing have risen a somewhat lesser 2.6% in June after May's 11.5% increase.
The effective fixed-interest rate on conventional 15-year mortgages was a low 3.96% last week, near the record low of 3.88% reached last October. For 30-year mortgages, the rate was 4.75%. 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.
TIPS Liquidity, Breakeven Inflation, and Inflation Expectations is from the Federal Reserve Bank of San Francisco and it can be found here.
| BA Mortgage Applications (SA, 3/16/90=100) | 6/17/11 | 6/10/11 | 6/3/11 | Y/Y % | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 549.9 | 584.6 | 517.5 | -11.5 | 659.3 | 736.4 | 642.9 |
| Purchase | 185.8 | 191.1 | 182.9 | 4.4 | 199.8 | 263.5 | 345.4 |
| Refinancing | 2,675.2 | 2,883.7 | 2,475.7 | -16.6 | 3,348.1 | 3,509.2 | 2,394.1 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.96 | 3.94 | 3.93 | 4.42 (6/10) |
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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