Tradex Global Commentary: MBA Mortgage Applications

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications rose 1.3% last week.  The share of applications to refinance rose to 78%, the highest reading since late February.  The weekly numbers are volatile, but we believe that the major refinancing wave from HARP2 is past us. I expect that the refinancing share of mortgage applications will continue to level off, but that new home purchase applications will trend higher as we enter the warmer buying season with 30 Year Fixed Rate Mortgages at 3.87%. Confidence is the key to a strong economic recovery.  Without confidence, employers will not hire new workers, consumers will not buy many expensive widgets and the housing market will continue to languish.  Let’s hope that leadership emerges in Europe and that the unsettling economic situation improves at a more rapid pace than is currently expected. – Richard Travia

EXTERNAL RESEARCH COMMENTARY

The number of mortgage applications filed in the U.S. last week rose 1.3% from the prior week, the Mortgage Bankers Association said Wednesday, as refinance activity also picked up. The refinance index increased 2% from the previous week to its highest level since February 10, 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, purchasing slipped slightly from one week earlier, MBA said. Low mortgage rates have convinced many homeowners to refinance their mortgages, though tougher lending requirements still keep many prospective home buyers from taking out new debt. The share of applications filed to refinance an existing mortgage rose to 78% of total applications, the highest share since February 24, from 77% in the previous week. Adjustable-rate mortgages remained at about 5% of activity last week. The average rate on 30-year fixed-rate mortgages with conforming loan balances fell to 3.87%, the lowest rate in the survey's history, from 3.91%. Rates on similar mortgages with jumbo loan balances decreased to 4.13%, another all-time low, from 4.23%. The average rate on FHA-backed 30-year fixed-rate mortgages was unchanged at 3.7% from the prior week. The average for 15-year fixed-rate mortgages slipped to a survey low of 3.2% from 3.23%. The 5/1 ARM average increased to 2.78% from 2.77% in the prior week.

To receive these weekly commentary pieces by email - please contact john@thetradexgroup.com