MBA Mortgage Applications 5-29-13
TRADEX
GLOBAL INTERNAL COMMENTARY
Mortgage
Applications Fall 9%.
According
to the MBA, total mortgage applications were down 9% from the previous week and
are now down the last three consecutive weeks.
The refinance index was down 12%, the largest single weekly drop in
refinance applications this year. The
“new” purchases index was up 3% and has been fairly steady (new and existing
homes are selling well). The share of
applications to refinance a mortgage fell to 71% from 74% the prior week. The refinance share of applications earlier
in the year was approximately 90%. The
average rate on a conforming mortgage was 3.9% , the highest rate since May
2012. I have cautiously been saying for
months that the greatest re-fi wave in history was burning out and that most
homeowners that could have done a re-fi had already done so. Now it also looks like rates are headed up
and that will deter homeowners to re-fi.
April was a capitulation event for mortgage IO’s, where many investors
threw in the towel and prices of agency IO’s went close to 2008 levels. We believe that both agency and non-agency
IO’s are the best fixed income carry instrument available. You can hedge your interest rate and
volatility exposure and still have a double digit return as pre-pays slow down. At 9 dollar prices these securities can more
than double in the next 12-18 months, as well.
We are still watching closely, but believe this positively convex asset
class will be a large outperformer as rates move up. In our Liquid Real Estate Portfolio we will
be close to 50% IO’s and 50% CMBS & RMBS where the pre-pays are our friend
and the improving fundamentals in real estate will increase the prices of the
bonds. It may actually be a goldilocks
scenario in the mortgage sector after a long period of volatility. We hope so… Keep nimble – Michael Beattie
EXTERNAL RESEARCH
COMMENTARY
The total number of mortgage applications filed in the U.S. last week fell 9% from the prior week as refinance applications fell for a third consecutive week and interest rates jumped to their highest level in a year, the Mortgage Bankers Association said Wednesday. The market composite index was down 8.8% on a seasonally adjusted basis for the week ended May 24 from the previous week, according to the weekly survey covering more than three-quarters of all U.S. residential-mortgage applications. The refinance index slipped 12%, the largest single week drop in refinance applications this year, from the prior week to hit its lowest level since December. On a seasonally-adjusted basis, the purchasing index increased 3% from the prior week. In the latest week, interest rates rose in response to stronger economic data and an increasing likelihood that the Federal Reserve will soon begin to taper asset purchases, said MBA's Vice President of Research and Economics Mike Fratantoni. Still low interest rates have attracted new buyers and persuaded many homeowners to refinance their mortgages, though tightened credit restrictions have deterred many borrowers from filing loan applications. The share of applications filed to refinance an existing mortgage fell to 71% from 74% a week earlier. Adjustable-rate mortgages, or ARMs, made up 5% of total activity. The average rate on 30-year fixed-rate mortgages with conforming loan balances increased to 3.9%, the highest rate since May 2012, from the prior week's 3.78%. Rates on similar mortgages with jumbo-loan balances rose to 4.07%, the highest level since August, from 3.93% in the prior week. The average rate on 30-year fixed-rate mortgages backed by the Federal Housing Administration also hit its highest level since August, rising to 3.62% from the prior week's 3.53%. The average rate for 15-year fixed-rate mortgages jumped to 3.1% from 2.96% a week earlier. The 5/1 ARM average rate was unchanged from a week earlier at 2.6%.
The total number of mortgage applications filed in the U.S. last week fell 9% from the prior week as refinance applications fell for a third consecutive week and interest rates jumped to their highest level in a year, the Mortgage Bankers Association said Wednesday. The market composite index was down 8.8% on a seasonally adjusted basis for the week ended May 24 from the previous week, according to the weekly survey covering more than three-quarters of all U.S. residential-mortgage applications. The refinance index slipped 12%, the largest single week drop in refinance applications this year, from the prior week to hit its lowest level since December. On a seasonally-adjusted basis, the purchasing index increased 3% from the prior week. In the latest week, interest rates rose in response to stronger economic data and an increasing likelihood that the Federal Reserve will soon begin to taper asset purchases, said MBA's Vice President of Research and Economics Mike Fratantoni. Still low interest rates have attracted new buyers and persuaded many homeowners to refinance their mortgages, though tightened credit restrictions have deterred many borrowers from filing loan applications. The share of applications filed to refinance an existing mortgage fell to 71% from 74% a week earlier. Adjustable-rate mortgages, or ARMs, made up 5% of total activity. The average rate on 30-year fixed-rate mortgages with conforming loan balances increased to 3.9%, the highest rate since May 2012, from the prior week's 3.78%. Rates on similar mortgages with jumbo-loan balances rose to 4.07%, the highest level since August, from 3.93% in the prior week. The average rate on 30-year fixed-rate mortgages backed by the Federal Housing Administration also hit its highest level since August, rising to 3.62% from the prior week's 3.53%. The average rate for 15-year fixed-rate mortgages jumped to 3.1% from 2.96% a week earlier. The 5/1 ARM average rate was unchanged from a week earlier at 2.6%.
No comments:
Post a Comment