MBA Mortgage Applications, Week of October 19th

TRADEX GLOBAL INTERNAL COMMENTARY

The MBA said that its seasonally adjusted index of mortgage applications fell 4.2% during the week ending October 12th.  The home purchase component increased 1% from the previous week (3% mortgages make a difference!).  The refinance component fell 5.3% from the previous week (see my comment on peak prepayment speeds from 2 weeks ago), while the share of refinancings to total applications decreased to 82% from 83%.  We think two things are clear:  1) New home purchases are clearly gaining traction, and 2) Refinancing is probably going to crest in the next quarter.  We believe that both of these will be a major positive to the housing industry, the employment situation and for Tradex liquid real estate portfolios.  Keep nimble – Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Applications for U.S. home mortgages fell last week, but demand for purchase loans, a leading indicator of home sales, reached the highest level since June, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.2 percent in the week ended October 12. The seasonally adjusted purchase index, which measures loan requests for home purchases, increased by 1 percent over the previous week, putting the index at its highest level since June. The data was adjusted to account for the Columbus Day holiday. The MBA's seasonally adjusted refinance index fell 5.3 percent from the previous week. The refinance share of total mortgage activity decreased to 82 percent of total applications from 83 percent the prior week. Fixed 30-year mortgage rates rose 1 basis point to average 3.57 percent. Still, they remain near all-time lows following the Federal Reserve's latest economic stimulus program. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA. 

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