MBA Mortgage Applications, Week of 8/6 - 8/10

TRADEX GLOBAL INTERNAL COMMENTARY

Mortgage applications fell 4.5% last week; loan requests for home purchases fell 2% and refinancing applications fell 5.1%.  The share of applications for refi’s fell slightly to 81% from 81.2%.  HARP 2 continues to work, but could be seeing diminishing impact.  Although the 10 Year Treasury is back up to 1.78%, rates remain at historic lows and likely are here to stay for awhile.  As the refinancing and shadow inventory foreclosure purchases fade, new home loan applications should see an uptick.  In the meantime, our interest-only mortgage derivative exposure should benefit from the slightly higher interest rates and potentially slower prepayment speeds that are implied by the last 5 weekly numbers.  – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Applications for U.S. home mortgages tumbled last week, with demand for new loans down for the fifth week in a row as interest rates held steady, 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 4.5 percent in the week ended Aug 10. The gauge of loan requests for home purchases, a leading indicator of home sales, dropped 2.0 percent. The measure of applications for refinancing fared even worse and was down 5.1 percent. The refinance share of total mortgage activity eased to about 81 percent of applications from 81.2 percent the week before. Fixed 30-year mortgage rates were unchanged but still at historically low levels at an average 3.76 percent. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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