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Economy in Brief

U.S. Mortgage Loan Applications To Refinance Jump With Lower Interest Rates
by Tom Moeller  October 22, 2014

The Mortgage Bankers Association reported that their total Mortgage Market Volume Index surged 11.6% last week (-9.1% y/y) following two week's of moderate increase. Applications to refinance an existing loan jumped by roughly one-quarter w/w (-9.0% y/y) following two weeks of firm improvement. Home purchase applications declined 4.8% (-9.4% y/y) after a moderate slip during the prior week.

Mortgage financing costs declined sharply. The effective interest rate on a 15-year mortgage fell to 3.34%, down from 3.63% four weeks earlier and was the lowest level since May 2013. The effective rate on a 30-year fixed rate loan declined to 4.16%, down from 4.49% four weeks ago. The rate on a Jumbo 30-year loan declined to 4.09%, the lowest level in roughly a year and a half. For adjustable 5-year mortgages, the effective interest rate fell sharply to 3.08%, down versus last year's 3.74% peak and the lowest level since June 2013.

The average mortgage loan size surged w/w to $298,900 as refinancings spiked to $306,400. The average loan size for home purchases also rose sharply to a new high of $285,000.

Applications for fixed interest rate loans rose to the highest level since January but declined 11.9% y/y. Adjustable rate loan applications rose by nearly one-third both w/w and 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) 10/17/14 10/10/14 10/03/14 Y/Y% 2013 2012 2011
Total Market Index 413.2 370.4 350.7 -9.1 616.6 813.8 572.3
 Purchase 163.4 171.7 172.9 -9.4 197.5 187.8 182.6
 Refinancing 1,852.3 1,502.4 1,358.0 -9.0 3,070.0 4,505.0 2,858.4
15-Year Mortgage Effective Interest Rate (%) 3.34 3.48 3.56 3.57
3.42 3.25 3.97
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