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Economy in Brief

U.S. Mortgage Loan Applications Benefit From Lower Interest Rates
by Tom Moeller  February 5, 2014

The Mortgage Bankers Association reported that their total mortgage market index improved 0.4% last week (-52.3% y/y). Applications rose 20.5% since the end of December. The gain over the last five week's was driven by a 28.8% increase (-62.9% y/y) in refinancings. Applications to purchase a home improved 4.5% (-16.4% y/y) since the end of December.

The effective interest rate on a 15-year mortgage fell last week to 3.60%, the lowest level since late-November. That's still up, however, from 2.89% early in May of 2013. The effective rate on a 30-year fixed rate loan declined to 4.54% last week while the rate on a Jumbo 30-year loan fell to 4.45%. The effective interest rate on an adjustable 5-year mortgage slipped to 3.30% but remained up from its low of 2.59% at the beginning of May last year.

Applications for fixed interest rate loans fell 54.2% y/y while adjustable rate loan applications fell 4.3% y/y. The average mortgage loan size rose to $229,900. The average loan size for home purchases jumped to $276,100 last week and for refinancings it edged up to $201,300.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (SA, 3/16/90=100) 01/31/14 01/24/14 01/17/14 Y/Y% 2013 2012 2011
Total Market Index 405.2 403.4 404.1 -52.3 616.6 813.8 572.3
 Purchase 180.5 187.6 184.8 -16.4 197.5 187.8 182.6
 Refinancing 1,693.2 1,645.2 1,682.1 -62.9 3,070.0 4,505.0 2,858.4
15-Year Mortgage Effective Interest Rate (%) 3.60 3.66 3.75 2.99
3.42 3.25 3.97
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