According to the Mortgage Bankers Association, the 5.2% rise in the total number of mortgage applications last week recovered virtually all of the prior two weeks' decline. Nevertheless, the rebound left the recent level 26% below the peak in early June.

The performance ofpurchase applications is consistent with a topping, but not at all a collapse, in the housing market. Purchase applications rose 4.0% last week and added to a several weekly gains during November. The latest lifted the level 4.7% ahead of the November average which had inched up 0.8% from October.

Purchase applications nevertheless remain 5% below the Spring peak. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

A 7.6% w/w rise in applications to refinance recovered the sharp decline of the prior week but applications had fallen hard for six successive weeks and the latest level was down 2.8% from the November average. Versus the June peak, the latest level of refis is down 46%.

The effective interest rate on a conventional 30-year mortgage rose further last week to 6.58% from 6.44% the prior week. Rates averaged 6.52% in November and averaged 5.81% in June. The effective rate on a 15-year mortgage also rose to 6.18% from 6.04%. The interest rates on 15 and 30 year mortgages are closely correlated (>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 accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

Trends in Home Ownership from the Federal Reserve Bank of St. Louis can be found here.