Global| Feb 05 2014U.S. Mortgage Loan Applications Benefit From Lower Interest Rates
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that their total mortgage market index improved 0.4% last week (-52.3% y/y). Applications rose 20.5% since the end of December. The gain over the last five week's was driven by a 28.8% [...]
The Mortgage Bankers Association reported that their total mortgage market index improved 0.4% last week (-52.3% y/y). Applications rose 20.5% since the end of December. The gain over the last five week's was driven by a 28.8% increase (-62.9% y/y) in refinancings. Applications to purchase a home improved 4.5% (-16.4% y/y) since the end of December.
The effective interest rate on a 15-year mortgage fell last week to 3.60%, the lowest level since late-November. That's still up, however, from 2.89% early in May of 2013. The effective rate on a 30-year fixed rate loan declined to 4.54% last week while the rate on a Jumbo 30-year loan fell to 4.45%. The effective interest rate on an adjustable 5-year mortgage slipped to 3.30% but remained up from its low of 2.59% at the beginning of May last year.
Applications for fixed interest rate loans fell 54.2% y/y while adjustable rate loan applications fell 4.3% y/y. The average mortgage loan size rose to $229,900. The average loan size for home purchases jumped to $276,100 last week and for refinancings it edged up to $201,300.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.
| MBA Mortgage Applications (SA, 3/16/90=100) | 01/31/14 | 01/24/14 | 01/17/14 | Y/Y% | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 405.2 | 403.4 | 404.1 | -52.3 | 616.6 | 813.8 | 572.3 |
| Purchase | 180.5 | 187.6 | 184.8 | -16.4 | 197.5 | 187.8 | 182.6 |
| Refinancing | 1,693.2 | 1,645.2 | 1,682.1 | -62.9 | 3,070.0 | 4,505.0 | 2,858.4 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.60 | 3.66 | 3.75 | 2.99 (1/13) |
3.42 | 3.25 | 3.97 |
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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