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Economy in Brief

U.S. Mortgage Loan Applications Improve Again, While Financing Rates Decline Again
by Tom Moeller  May 14, 2014

Lower mortgage rates are prompting an increase in home-financing activity. The Mortgage Bankers Association reported that their total Mortgage Market Volume Index increased 3.6% last week (-58.5% y/y) but remained in the sideways pattern of the last month. Applications remained two-thirds below the peak in September 2012. Applications to refinance an existing loan increased jumped 6.8% but home purchase applications applications were essentially unchanged (-12.5 y/y).

Interest rates continued to decline modestly. The effective interest rate on a 15-year mortgage eased to 3.51%, the lowest level since late-October. Most other mortgage rates also moved lower. The effective rate on a 30-year fixed rate loan declined to 4.45%, the lowest level since early-October. The rate on a Jumbo 30-year loan held steady at 4.33% following its sharp decline during the prior week. For adjustable 5-year mortgages, the effective interest rate at 3.26% was its lowest since early-December.

The average mortgage loan size increased further to $249,300, the highest level since late-2008. The average loan size for home purchases rose to $280,500 and for refinancings it increased to $218,500.

Applications for fixed interest rate loans declined by 60.2% y/y while adjustable rate loan applications were off by 23.1%.

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) 05/09/14 05/02/14 04/25/14 Y/Y% 2013 2012 2011
Total Market Index 363.4 350.9 333.2 -58.5 616.6 813.8 572.3
 Purchase 185.1 185.2 170.1 -12.5 197.5 187.8 182.6
 Refinancing 1,386.4 1,297.6 1,267.0 -71.2 3,070.0 4,505.0 2,858.4
15-Year Mortgage Effective Interest Rate (%) 3.51 3.58 3.61 3.08
3.42 3.25 3.97
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