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Wednesday, June 24, 2009

MBA: Mortgage Rates Decrease Slightly

by Calculated Risk on 6/24/2009 08:25:00 AM

The MBA reports:

The Market Composite Index, a measure of mortgage loan application volume, was 548.2, an increase of 6.6 percent on a seasonally adjusted basis from 514.4 one week earlier.
The Refinance Index increased 5.9 percent to 2116.3 from 1998.1 the previous week and the seasonally adjusted Purchase Index increased 7.3 percent to 280.3 from 261.2 one week earlier.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.44 percent from 5.50 percent ...
MBA Purchase Index Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 2002.

Note: The increase in 2007 was due to the method used to construct the index. Since the MBA surveyed mostly the major lenders, when lenders like New Century went under - this pushed more borrowers to lenders included in the survey. As smaller lenders went out of business, the remaining lenders saw more applications. Plus a number of borrowers started submitting multiple applications. Both factors distorted the index. That increase in 2007 fooled many people, like Alan Greenspan. See, from Bloomberg: Greenspan Says `Worst' May Be Past in U.S. Housing (Oct 6, 2006)

Although we can't compare directly to earlier periods because of the changes in the index, this shows no significant pick up in overall sales activity.