The Mortgage Bankers Association (MBA) reported mortgage application data for the week ending April 3, 2009. In light of the government’s efforts to stabilize housing and the mortgage market, we believe leading indicators such as the MBA survey have
taken on renewed importance for monitoring housing demand.The Data
MBA Purchase Index = 297.7
Up 11.1% from last week, down 22.6% y/y
Average Mortgage Rates [30-year fixed, 80% loan-to-value (LTV)] = 4.73%
Up 12 basis points from 4.61% last week, with points remaining unchanged at 1.03 (…)Purchase activity continues to increases. Today’s 11% improvement in the purchase index is the fifth consecutive week of increases. In our view, this trend corroborates anecdotal evidence that buying activity has picked up noticeably in recent weeks to take advantage of recent price declines and record low mortgage rates. We remain cautious about the sustainability of these seasonal increases, however, due to a still tightening mortgage market, further projected declines in home values, and mounting job losses. That said, we are encouraged that the purchase index has now increased 19% over the last six weeks.
The index’s four-week moving average, though, which we believe is a better indicator of trends, is still down 28% y/y. Refinancing activity ticks higher. Refinancing activity continues to dominate the mortgage market, accounting for 77.9% of all applications, down from 79.1% last week. Following last week’s modest 4% increase, the refinance index increased another 3% in today’s release. We would highlight this is a significant deceleration in refinancing activity from two weeks ago, when the index surged 41%.
These increases, in our view, continue to be fueled by the dramatic (and highly publicized) decline in mortgage rates, as well as the Administration’s effort to increase the pool of borrowers eligible for refinancing through its foreclosure mitigation plan.
Affordability has improved rapidly. Declining home prices, combined with lower mortgage rates, have helped improve single family housing affordability (as calculated by Raymond James’ Housing Affordability Index) to some of the most affordable
levels in decades. Dropping this week’s data into our framework yields a 133 reading versus 102 last year, surpassing previous highs set in 1993 and 2003.Raymond James & Associates
Related posts:
- HOUSING WATCH: MBA Mortgage Data: Purchase Apps Decline
- HOUSING WATCH: Purchase Apps Hold Steady; Refinancing Slows
- HOUSING WATCH: MORTGAGE APPS STILL LOW
- MORTGAGE PURCHASE APPS TREND UP
- U.S. mortgage applications slump to 8-year low- Update
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