Paper Economy - A US Real Estate Bubble Blog: Reading Rates: MBA Application Survey

Wednesday, November 21, 2007

Reading Rates: MBA Application Survey – November 21 2007

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 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 slightly since last week to 6.18% while the purchase volume decreased 2.0% and the refinance volume decreased 5.0% compared to last weeks results.

It’s important to note that the data is reported (and charted) weekly and that the rate data represents average interest rates, and the index data represents mortgage loan application volume for home purchases, home refinances and a composite of all loans.

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 January 2007.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages over the last number of weeks (click for larger version).

The following charts show the Purchase Index, Refinance Index and Market Composite Index since January 2007 (click for larger versions).

Labels: Bernanke, economy recession, fed rate cut, Federal Reserve, housing bubble realtor real estate, interest rates, mortgage rates

5 Comments:

America seems to be financially totally done in for... I hate to say it but it seems to be true...

By Gledwood, at 9:47 AM
Doood, if that is true, then the UK and all of the rest of the 'Free World' is right behind.

Suggestion: recheck your calculations before you bet against the USA.

We may be fatter, appear to be sluggish and many even ignorant but things aren't always what they appear to be.

We may be down but we are not even close to being out.

Oh, it's not your fault of course. If the daily drum beat of info is nothing but negative, negative, negative of course the picture forming looks bleak.

But how balanced is that message?

How accurate is it? That is the question.

Anyone who thinks Americans will just roll over in despair just because what goes up will always come down and poo happens doesn't understand US at all. The only way to avoid risk is to do nothing and we are not generally known for doing nothing.

Now, actually, might be a great time to buy dollars!

;)

By Anonymous, at 10:32 AM
anon,

I wish I could be so optimistic and cool headed but it appears to me that the real correction has yet to even begin.

No American wants to think of the possibility of the economy running aground but where was all the rational thought when the truly absurd circumstances of the housing-credit bubble were transpiring?

Even as late as 2006, anyone who suggested that residential housing was a bubble and that a tragic correction was ahead for the consumer was deemed a "chicken little".

It's too late to be optimistic now.

Americans will have to learn the hard way... but aren't those the best lessons?

By SoldAtTheTop, at 10:50 AM
Sold,
Just to be perfectly clear, the 'doood' I was answering was gledwood.

Anyone who reads your blog has to know that you have pretty well predicted the current events pretty well, better than many of the 'professionals.'

The hard lessons may be the best remembered. But the best lessons are those learned as 'a word to the wise' which I think is exactly what you are trying to do with your blog.

Until we are all wise, the hard lessons may be just as you say, the best lessons we will have.

Can't you just hear Gloria Gaynor right now? We will survive and I think we will come out of all of this stronger than ever.

By Anonymous, at 11:13 AM
The 10y treasury shows lower and lower yields. Is this mirrored in mortgage rates, or could someone detect a decoupling, with the mortgages demanding increasing risk premiums? As a mortgage lender, I would demand higher risk premiums, if the FICO is not high and the downpayment is not 30% or higher in this falling market.

By Peter T, at 5:22 PM