Global| Jan 09 2019U.S. Mortgage Loan Applications Surge as Interest Rates Decline
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that its total Mortgage Applications Index jumped 23.5% (-7.0% y/y) during the week ended January 4 following three consecutive weeks of decline. Applications to purchase a home jumped 16.5% [...]
The Mortgage Bankers Association reported that its total Mortgage Applications Index jumped 23.5% (-7.0% y/y) during the week ended January 4 following three consecutive weeks of decline. Applications to purchase a home jumped 16.5% (5.2% y/y), also after falling for three straight weeks. Applications to refinance a mortgage increased by roughly one-third w/w, but remained down by nearly one-quarter y/y.
The effective interest rate on a 15-year fixed-rate mortgage declined w/w to 4.25%, down from a 4.71% high early in November. The rate remained above the low of 3.01% averaged in July 2016. The effective rate on a 30-year fixed-rate loan fell to 4.88%. The rate on a Jumbo 30-year loan eased to 4.60%, and for adjustable 5-year mortgages, the effective interest rate fell to 4.17%.
The average mortgage loan size surged to a record $318,400 (15.4% y/y). For purchases, the average loan size nudged up to $300,300 (-0.1% y/y). For refinancings, the average loan size spiked to $339,800 (33.8% y/y), which was by far a record.
Applications for fixed-rate loans fell 10.4% y/y while applications for adjustable-rate loans surged by more than one-half y/y.
The survey covers over 75% 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.
The minutes to the latest FOMC meeting can be found here.
| MBA Mortgage Applications (%, SA) | 01/04/09 | 12/28/18 | 12/21/18 | Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 23.5 | -8.5 | -1.4 | -7.0 | -10.4 | -17.8 | 15.6 |
| Purchase | 16.5 | -7.6 | -0.7 | 5.2 | 2.1 | 5.6 | 13.3 |
| Refinancing | 35.3 | -10.6 | -1.9 | -21.5 | -24.3 | -34.0 | 17.3 |
| 15-Year Mortgage Effective Interest Rate (%) | 4.25 | 4.40 | 4.43 | 3.89 (Jan.'18) | 4.35 | 3.59 | 3.22 |
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.
