Recent Updates

  • Philippines: Producer Price Index (Jun)
  • Austalia: Assets/Liabs of Authorized Deposit Taking Inst (Jun), PPI, Mfg Materials Prices, Construction Materials Prices (Q2)
  • China: Trust Products (Jul)
  • Japan Regional: Japan: Labor Force Survey by Prefecture (Q2)
  • more updates...

Economy in Brief

U.S. Mortgage Applications Recover But Purchase Apps Weak
by Tom Moeller June 23, 2010

Low interest rates continue to prompt firm lending by mortgage bankers. For June so far, The Mortgage Bankers Association reported that applications were up modestly from May and were 13.3% higher than last year despite a slight decline last week.

Firm lending activity continued to reflect strong refinancings. Weekly applications for mortgage refinance fell last week. However, so far in June applications rose m/m and were 50% higher than last year. 

In the back-wash of the government tax credit's expiration, applications to purchase a home fell 1.2% last week. The decline brought the total drop since a late-April peak to nearly 40%. 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.

The effective fixed interest rate on conventional 15-year mortgages held steady at 4.44% last week, the cycle low. For 30-year mortgages the rate fell slightly to an average 4.96%. 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 slightly to 7.12%. 

 The drop in interest rates prompted increases in both fixed-rate (12.4% y/y and adjustable-rate (33.8% y/y) financing.

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.

Stressed, Not Frozen: The Federal Funds Market in the Financial Crisis from the Federal Reserve Bank of New York can be found here.

BA Mortgage Applications (SA, 3/16/90=100) 06/18/10 06/11/10 06/04/10 Y/Y 2009 2008 2007
Total Market Index 621.2 659.9 560.9 13.3% 736.4 642.9 652.6
Purchase 177.9 180.0 167.8 -36.5 263.5 345.4 424.9
Refinancing 3,208.5 3,461.5 2,859.5 51.6 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.44 4.44 4.49 5.21(06/09) 4.85 5.9 6.2
large image