MBA Mortgage Application Numbers, Week of July 23-27

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications rose 0.2% last week, and refinancing applications rose to its highest level in three years.  The share of applications for refi’s rose to 81%, the highest level since January.  HARP 2 is working, as less credit-worthy borrowers and those owning homes with negative equity are allowed to refi at lower rates.  That being said, we do believe that we are close to the peak of refinance-ability as most of the homeowners that can refinance, have refinanced.  New home mortgage applications are still not picking up in a major way, but the shadow inventory is being decreased significantly as flippers and other cash buyers are stepping in.  Once this supply is worked out, home prices should at least see a bottom and new home applications will pick up.  Don’t worry, the Fed reaffirmed today that it will keep rates “exceptionally low through at least late 2014”. – Richard Travia

EXTERNAL RESEARCH COMMENTARY

The number of total mortgage applications filed in the U.S. last week edged up 0.2% as refinance applications rose to its highest level in three years, the Mortgage Bankers Association said Wednesday. The refinance index increased 0.8% from the previous week to its highest level since April 2009, according to the MBA's weekly survey, which covers more than three-quarters of all U.S. retail residential mortgage applications. On a seasonally adjusted basis, the purchasing index slipped 2% from a week earlier, MBA said. Concerns about the macroeconomic environment have weighed on interest rates of late, though rates crept higher in the latest week. While low rates have convinced many homeowners to refinance their mortgages, tougher lending requirements still keep many prospective home buyers from taking out new debt. The share of applications filed to refinance an existing mortgage increased to 81% of total applications to its highest level since January. Adjustable-rate mortgages made up 4.1% of total activity. The average rate on 30-year fixed-rate mortgages with conforming loan balances increased to 3.75% from 3.74% in the prior week. Rates on similar mortgages with jumbo loan balances rose to 4.01% from 3.99% a week earlier. The average rate on FHA-backed 30-year fixed-rate mortgages was unchanged from the prior week at 3.52%, which is the lowest rate in the survey's history. The average for 15-year fixed-rate mortgages rose to 3.09% from 3.07% a week earlier. The 5/1 ARM average increased to 2.73% from 2.68% in the prior week.

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