TGA Commentary: MBA Mortgage Applications 6/2-6/6

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications fell 2.1% last week.  The share of applications to refinance fell to 77% from 78% the week before.  The weekly numbers are volatile, but we do believe, based on our conversations with mortgage derivative hedge funds, that the major refinancing wave from HARP2 is past us (This is positive news for our MBS derivative strategies, but less positive for homeowners who were unable to refinance). 30 Year Fixed Rate Mortgages averaged 3.79% last week, the lowest rates in the HISTORY of the survey. The market is waiting on the Fed minutes this afternoon, and we are maintaining our cautious stance with tail hedges. – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Applications for home mortgages fell last week due to a drop in refinancing activity even as interest rates hit record lows, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.1 percent in the week ended July 6. The results were adjusted to account for the July 4 holiday. The MBA's seasonally adjusted index of refinancing applications fell 3.4 percent, but the gauge of loan requests for home purchases, a leading indicator of home sales, rose 3.3 percent. The refinance share of total mortgage activity fell to 77 percent of applications from 78 percent the week before. Fixed 30-year mortgage rates averaged 3.79 percent in the week, down 7 basis points from 3.86 percent the week before and the lowest in the history of the survey. Fixed 30-year mortgage rates for loans backed by the Federal Housing Administration were also at record lows of 3.63 percent, down 6 basis points from the previous week. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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