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Mortgage Apps: Purchase Applications Resume Climb

January 25, 2017

Bottom Line: While there was an adjustment for the MLK Day holiday, purchase applications rose on a seasonally adjusted and un-adjusted basis in the latest week, despite an increase in 30-year mortgage rates. The trend in purchase applications, looking at 4-week averages, is higher again after losing momentum in November. With two months of higher rates and purchase applications still pushing to post-crisis highs, it is still too early to tell if there is a negative impact from higher rates as some of the purchase application activity may be due to a "media effect" as news of higher rates initially has potential borrowers rushing to buy before rates move even higher. This trend bears watching.

The MBA Mortgage Applications Index ROSE by 4.0% during the week ended January 20 to 397.4, modestly below its 13 week average of 413.4 and 15.9% BELOW its year ago level.

The Purchase Index ROSE by 6.0% to 243.2, moderately above its 13 week average of 226.9 and 2.3% ABOVE its year ago level. The level of purchase activity had stayed quite low after the crisis until 2015 when it started to rise. But that trend has lost momentum since mid-2016.

The Refinance Index ROSE by 0.2% to 1,266. Despite this increase, refinancing activity is sharply below its 13 week average of 1,494 and 30.6% BELOW its year ago level.

Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 8 bps to 4.35% and with the 15-year fixed rate increasing by 6 bps to 3.57%.

Article by Contingent Macro Advisors