MBA Mortgage Applications 7/3/13

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications fell 12% last week according to MBA.

The headline is down 12% for all applications, but the real story is a 16% drop in the refinance sector. The share of applications to refinance an existing mortgage decreased to 64%, which was at 90% not too long ago. The new purchase index dropped marginally by 3% as the new higher interest rate had deterred some buyers from buying a new home. The average rate for a 30-year conforming mortgage increased to 4.58%, the highest rate since October 2011. I have been seeing this trend of slower prepayments, and the dealers and the market have finally rewarded those patient IO investors this month. Please expect to see some additional commentary that will be sent out shortly to interested investors in the Tradex Global Liquid Real Estate Portfolio. Keep nimble, and enjoy our great 4^th of July holiday -  Michael Beattie

 

EXTERNAL RESEARCH COMMENTARY

The total number of mortgage applications filed in the U.S. last week fell 12% from the prior week as interest rates jumped to their highest level in two years, the Mortgage Bankers Association said Wednesday. The refinance index decreased 16% for the week ended June 28 from the previous week, according to the weekly survey covering more than three-quarters of all U.S. residential-mortgage applications. MBA also reported the seasonally adjusted purchasing index slipped 3% from a week earlier. Interest rates have increased in recent weeks amid stronger economic data, curbing some individuals' appetite to buy a new home. Mike Fratantoni, MBA's vice president of research and economics, said fewer homeowners have an incentive to refinance at the current interest rates. Refinance-application volume dropped more than 15% last week. The share of applications filed to refinance an existing mortgages decreased to 64%, the lowest level since May 2011, from the prior week's 67%. Adjustable-rate mortgages, or ARMs, increased to 8% of total applications, the highest level since July 2008. The Home Affordable Refinance Program share of refinance applications rose to 34% from 30% in the prior week. The average rate on 30-year fixed-rate mortgages with conforming loan balances climbed to 4.58%, the highest rate since October 2011, from the prior week's 4.46%. Rates on similar mortgages with jumbo-loan balances rose to 4.68%, the highest rate since March 2012, from 4.52% a week earlier. The average rate on 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 4.27%, the highest rate since September 2011, from 4.2% a week earlier. The average rate for 15-year fixed-rate mortgages climbed to 3.64%, the highest level since July 2011, from 3.55% a week earlier. The 5/1 ARM average rate rose to its highest level since July 2011, jumping to 3.33% from 3.06% a week earlier.