Reading Rates: MBA Application Survey, October 12, 2009

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage decreased 7 basis points since last week to 4. 90% while the purchase application volume decreased 11.7% and the refinance application volume increased 11.3% over the same period.

It’s important to recognize that despite the Federal Reserve’s “quantitative easing” measures and record low interest rates, the purchase application volume has now dropped to the lowest reading since December 2000.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since November 2006.

click to enlarge
The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks.


The following charts show the Purchase Index, Refinance Index and Market Composite Index since November 2006.

Comments

[logicalthought:]

>>...the purchase application volume has now dropped to the lowest reading since December 2000.<<

The expiration of the previous "taxpayer money piss-away"-- oh, sorry, I meant "new home tax credit"-- pulled a lot of sales forward. Meanwhile, anyone who decided to buy a house after that "taxpayer money piss-away" expired is now waiting for the new "taxpayer money piss-away" to kick in. The great thing about the new "taxpayer money piss-away" is that it also includes used homes, which will help maximize the size of the urination stream.

Nov 12 09:44 PM

[j-dub:]

So it ain't really raining, then.
Hmmmmmm..................


On Nov 12 09:44 PM logicalthought wrote:

> >>...the purchase application volume has now dropped to the lowest
> reading since December 2000.<<
>
> The expiration of the previous "taxpayer money piss-away"-- oh, sorry,
> I meant "new home tax credit"-- pulled a lot of sales forward. Meanwhile,
> anyone who decided to buy a house after that "taxpayer money piss-away"
> expired is now waiting for the new "taxpayer money piss-away" to
> kick in. The great thing about the new "taxpayer money piss-away"
> is that it also includes used homes, which will help maximize the
> size of the urination stream.

Nov 14 03:04 PM