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Economy in Brief

U.S. Weekly Mortgage Applications For Purchase Rise As Refi's Fall
by Tom MoellerApril 28,2010

The Mortgage Bankers Association reported that mortgage applications slipped last week. For the month as a whole, applications were the lowest since July of last year. Weakness in borrowing is further evident in the roughly one-half decline in applications versus last year.

Weakness in borrowing reflects the huge drop in applications for mortgage refinancing. Applications fell nearly one-quarter this month versus March and by roughly two-thirds from the peak last April.

Conversely, applications to purchase a home firmed this month and last, ahead of Friday's expiration of an $8,000 home-buyer tax credit. Applications this month were at the highest level since October. During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales. The correlation has lessened recently.

Applications for fixed-rate mortgages were down by roughly one-half since last year while applications to refinance rose by three-quarters.

The effective fixed interest rate on conventional 15-year mortgages averaged 4.66% in April, the highest since January. For 30-year mortgages the rate also moved up to an average 5.32%. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities. Rates on adjustable one-year mortgages rose during the month to 7.11%, its highest since mid-2008.

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 covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site here.The figures for weekly mortgage applications are available in Haver's SURVEYW database.

BA Mortgage Applications (SA, 3/16/90=100) 04/23/10 04/16/10 04/09/10 Y/Y 2009 2008 2007
Total Market Index 534.6 550.5 484.6 -44.3% 736.4 642.9 652.6
  Purchase 257.9 240.1 218.0 2.5 263.5 345.4 424.9
  Refinancing 2,161.8 2,371.8 2,047.1 -57.7 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.61 4.59 4.65 4.72 (04/09) 4.85 5.9 6.2
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