Global| Oct 22 2014U.S. Mortgage Loan Applications To Refinance Jump With Lower Interest Rates
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that their total Mortgage Market Volume Index surged 11.6% last week (-9.1% y/y) following two week's of moderate increase. Applications to refinance an existing loan jumped by roughly one- [...]
The Mortgage Bankers Association reported that their total Mortgage Market Volume Index surged 11.6% last week (-9.1% y/y) following two week's of moderate increase. Applications to refinance an existing loan jumped by roughly one-quarter w/w (-9.0% y/y) following two weeks of firm improvement. Home purchase applications declined 4.8% (-9.4% y/y) after a moderate slip during the prior week.
Mortgage financing costs declined sharply. The effective interest rate on a 15-year mortgage fell to 3.34%, down from 3.63% four weeks earlier and was the lowest level since May 2013. The effective rate on a 30-year fixed rate loan declined to 4.16%, down from 4.49% four weeks ago. The rate on a Jumbo 30-year loan declined to 4.09%, the lowest level in roughly a year and a half. For adjustable 5-year mortgages, the effective interest rate fell sharply to 3.08%, down versus last year's 3.74% peak and the lowest level since June 2013.
The average mortgage loan size surged w/w to $298,900 as refinancings spiked to $306,400. The average loan size for home purchases also rose sharply to a new high of $285,000.
Applications for fixed interest rate loans rose to the highest level since January but declined 11.9% y/y. Adjustable rate loan applications rose by nearly one-third both w/w and y/y.
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) | 10/17/14 | 10/10/14 | 10/03/14 | Y/Y% | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 413.2 | 370.4 | 350.7 | -9.1 | 616.6 | 813.8 | 572.3 |
| Purchase | 163.4 | 171.7 | 172.9 | -9.4 | 197.5 | 187.8 | 182.6 |
| Refinancing | 1,852.3 | 1,502.4 | 1,358.0 | -9.0 | 3,070.0 | 4,505.0 | 2,858.4 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.34 | 3.48 | 3.56 | 3.57 (10/13) |
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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