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Economy in Brief

Mortgage Applications Slump
by Tom Moeller July 21, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association fell sharply again last week. Applications fell 4.0% on the heels of the 6.3% drop the prior week.

Purchase applications led the decline, down 6.1% (-0.5% y/y) following the 6.4% drop the prior week. Because of a large gain the first week, July purchase applications so far are 6.1% higher than in June.

During the last ten years there has been a 63% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

Applications to refinance mortgages fell a scant 0.7% after the 6.1% drop the prior week (-73.3% y/y). Refi's in July are 19.2% ahead of June.

The effective interest rate on a conventional 30-Year mortgage was stable at 6.22% versus 6.52% in June. The effective rate on a 15-year mortgage also was about stable at 5.68%, down from 5.98% averaged in June.

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 accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

MBA Mortgage Applications (3/16/90=100) 07/16/04 07/09/04 Y/Y 2003 2002 2001
Total Market Index 617.9 643.9 -51.9% 1,067.9 799.7 625.6
  Purchase 440.3 468.8 -0.5% 395.1 354.7 304.9
  Refinancing 1,651.1 1,662.4 -73.3% 4,981.8 3,388.0 2,491.0
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