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Thursday, November 12, 2009

MBA: Purchase Applications Fall to Nine Year Low

by Calculated Risk on 11/12/2009 09:05:00 AM

The MBA reports: Mortgage Refinance Applications Increase, Purchase Applications at Nine Year Low

The Market Composite Index, a measure of mortgage loan application volume, increased 3.2 percent on a seasonally adjusted basis from one week earlier. ...

The Refinance Index increased 11.3 percent from the previous week and the seasonally adjusted Purchase Index decreased 11.7 percent from one week earlier. The seasonally adjusted Purchase Index is at its lowest level since December 2000.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.90 percent from 4.97 percent, with points increasing to 1.03 from 1.01 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
It appears the post home buyer tax credit slump had started, although the tax credit will be extended and the eligibility expanded - so the slump might be delayed ... also existing home sales in October will probably be very strong - that is not good news for housing and the economy (since it was just demand from marginal buyers pulled forward at a very high cost).

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: a combination of lender failures, and borrowers filing multiple applications pushed up the index in 2007, even though activity was actually declining.