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Economy in Brief

U.S. Mortgage Loan Applications Recover as Interest Rates Move Lower
by Tom Moeller  May 7, 2014

The Mortgage Bankers Association reported that their total Mortgage Market Volume Index improved 5.3% last week (-62.9% y/y) but remained in the sideways pattern of the last month. Applications remained two-thirds below the peak in September 2012. Applications to purchase a home jumped 8.9% (-16.0% y/y) to the highest level since late-January. Application to refinance an existing loan increased 2.4% from its recovery low.

Interest rates took to a downward path last week. The effective interest rate on a 15-year mortgage ticked down to 3.58%, the lowest level since early-May. Most other mortgage rates were under greater downward pressure. The effective rate on a 30-year fixed rate loan declined to 4.50%, the lowest level since early-November. The rate on a Jumbo 30-year loan plunged to 4.33%, its lowest level in nearly a year. For adjustable 5-year mortgages, the effective interest rate at 3.12% was its lowest since late-October.

The average mortgage loan size surged to $246,900, the highest level since late-2008. The average loan size for home purchases rose to $277,200 and for refinancings it increased to $215,000.

Applications for fixed interest rate loans declined by nearly two-thirds y/y while adjustable rate loan applications were off by roughly one-quarter.

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.

Challenges for Monetary Policy Communication from Federal Reserve Governor Jeremy C. Stein can be found here.

MBA Mortgage Applications (SA, 3/16/90=100) 05/02/14 04/25/14 04/18/14 Y/Y% 2013 2012 2011
Total Market Index 350.9 333.2 354.0 -62.9 616.6 813.8 572.3
 Purchase 185.2 170.1 178.0 -16.0 197.5 187.8 182.6
 Refinancing 1,297.6 1,267.0 1,361.4 -75.2 3,070.0 4,505.0 2,858.4
15-Year Mortgage Effective Interest Rate (%) 3.58 3.61 3.63 3.08
3.42 3.25 3.97
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