"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, April 6, 2011

MBA Weekly Applications Survey

This survey, conducted by the Mortgage Bankers Association, tracks the weekly rate of change in applications for new mortgages and refinanced mortgages.  It's not a significant market mover in its own right, but it provides valuable clues to predict new home sales and existing home sales - and those are major market movers.
According to the MBA's press release, the Market Composite Index declined 2.0% for the week ending 4/1.  Most of the decline was driven by refinancing activity, as the Refinance Index declined 6.2% while the Purchase Index increased 6.7%.  Refinancing represented 61.2% of the week's mortgage activity (down from last week's 64.3%), and adjustable rate mortgage applications increased to 6.1% of total applications.  The average contract interest rate for 30-year fixed-rate mortgages increased 1 bps to 4.93%.
The takeaway here is that the overall number of home purchases (whether new or existing) increased last week, which is a harbinger of glad tidings for the economy.  Fewer people are attempting to refinance, though.

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