Global| Oct 27 2010Mortgage Applications Stabilize
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that a 3.2% w/w rise in mortgage applications recovered some of the prior week's decline. The stabilization left the uptrend in applications intact. They were at their highest level since May [...]
The Mortgage Bankers Association reported that a 3.2%
w/w rise in mortgage applications recovered some of the prior week's decline.
The stabilization left the uptrend in applications intact. They were at their
highest level since May 2009. Applications were up by roughly one-half from 12
months ago and were up roughly two-thirds from last year's low. Last
week's total increase reflected a 3.0% w/w increase in applications to refinance
a mortgage. Still, they were nearly double their year-ago level with the decline
in interest rates. Applications to purchase a home rose 3.9% following
two weeks of decline. That left applications off by roughly one-third from last
year, placing them near the lowest level since 1995. During the last ten years
there has been a 51% correlation between the y/y change in purchase applications
and the change in new plus existing single family home sales. The correlation
has lessened recently.
The effective fixed interest rate on conventional 15-year mortgages slipped to 3.91% last week. For 30-year mortgages the rate also fell to an average 4.45%, nearly the lowest since the early-1960s. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities. Rates on adjustable one-year mortgages slipped w/w to 7.19% versus 6.74% at the end of last year.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site here. The figures for weekly mortgage applications are available in Haver's SURVEYW database.
| BA Mortgage Applications (SA, 3/16/90=100) | 10/22/10 | 10/15/10 | 10/08/10 | Y/Y % | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 828.9 | 803.4 | 897.2 | 47.4 | 736.4 | 642.9 | 652.6 |
| Purchase | 176.4 | 169.7 | 181.8 | -30.8 | 263.5 | 345.4 | 424.9 |
| Refinancing | 4,626.1 | 4,491.1 | 5,060.3 | 96.6 | 3,509.2 | 2,394.1 | 1,997.9 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.91 | 3.99 | 3.88 | 4.68 (10/09) |
4.85 | 5.9 | 6.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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