Mortgage Apps: Potential Bottom But No Rebound

Bottom Line:  Mortgage rates rose last week. Secondary mortgage yields continued higher early this week, and spreads to Treasuries widened further.  Applications tumbled, led by purchase apps, which were down nearly 10%. While there are still hints of a bottoming, these data suggest that it will take time and lower rates before we see a material rebound in mortgage activity.The MBA Mortgage Application Index FELL sharply, DOWN -8.8% to 209.0, BELOW the 13-week average of 219.0 and -44.1% BELOW the year-ago level. Non-seasonally adjusted the index FELL -8.1%. The Purchase Index FELL sharply, DOWN -10.0% to 162.0, BELOW the 13-week average of 171.0 and -36.4% BELOW the year-ago level. The Refinancing Index FELL -5.8% to 450.0, BELOW the 13-week average of 458.0 and -56.0% BELOW the year-ago level. The effective (adjusted for points paid) 30-year mortgage rate ROSE 15bps to 6.61%, BELOW the 13-week average of 6.65% but 23bps ABOVE the year-ago level. Current coupon yields in the secondary market were up 10.0 bps last week, closing at 5.18%, and were up 14.0 bps this week through Tuesday.