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Economy in Brief

U.S. Mortgage Applications Slip Overall But Purchase Apps At 1995 Level
by Tom Moeller   September 22, 2010

The Mortgage Bankers Association reported that mortgage applications fell 1.4% last week following an 8.9% decline during the prior week. Nevertheless, overall applications remain up 18.3% from September '09.

Last week's total decline was led by a 3.3% fall in applications to purchase a home. Moreover, they were off by more than one-third from last year at the lowest level since 1995. 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 to refinance a mortgage slipped last week but remained up by one-half versus last year with the decline in interest rates.

The effective fixed interest rate on conventional 15-year mortgages fell to 4.10% last week. For 30-year mortgages the rate fell slightly to an average 4.60%, the lowest since the early-1960s. 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 slipped w/w to 7.10% versus 6.74% at the end of last year. 

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)

09/17/10 09/10/10 09/03/10 Y/Y '09 '08 '07
Total Market Index 790.6 801.5 880.0 18.3% 736.4 642.9 652.6
 Purchase 177.6 183.7 184.5 -38.4 263.5 345.4 424.9
 Refinancing 4,357.4 4,396.1 4,926.5 51.2 3,509.2 2,394.1 1,997.9
15-Year Mortgage Effective Interest Rate (%) 4.10 4.22 4.22 4.67
4.85 5.9 6.2
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