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Economy in Brief

U.S. Mortgage Loan Applications Improve With Lower Interest Rates
by Tom Moeller  October 8, 2014

The Mortgage Bankers Association reported that their total Mortgage Market Volume Index increased 3.8% last week (-23.1% y/y) following two week's of decline. Applications remained near the lowest level of the economic recovery. Applications to refinance an existing loan jumped 5.0% (-31.9% y/y) following two weeks of decline. Home purchase applications gained 2.4% (-8.1% y/y) after two of being roughly unchanged.

Mortgage financing costs remained under contol. The effective interest rate on a 15-year mortgage edged lower to 3.56%. The effective rate on a 30-year fixed rate loan fell to 4.35%. The rate on a Jumbo 30-year loan slipped to 4.29%. For adjustable 5-year mortgages, the effective interest rate fell sharply to 3.33% and remained down versus last year's 3.74% peak.

The average mortgage loan size jumped w/w to $246,300 but remained below the $253,800 May peak. For home purchases, the average loan size rose to $275,000, down versus the $280,500 high. For refinancings, it increased w/w to $224,000, off from the $232,200 high.

Applications for fixed interest rate loans declined 24.2% y/y while adjustable rate loan applications were off 6.2% y/y.

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) 10/03/14 09/26/14 09/19/14 Y/Y% 2013 2012 2011
Total Market Index 350.7 337.8 338.4 -23.1 616.6 813.8 572.3
 Purchase 172.9 168.8 168.8 -8.1 197.5 187.8 182.6
 Refinancing 1,358.0 1,293.7 1,297.5 -31.9 3,070.0 4,505.0 2,858.4
15-Year Mortgage Effective Interest Rate (%) 3.56 3.62 3.63 3.57
3.42 3.25 3.97
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