|
PURCHASE MORTGAGE APPLICATIONS
|
Statistic |
| MOST
RECENT STATISTIC: |
210.3 |
| GRADE: |
F |
| PERIOD
COVERED: week ending |
11/13/09 |
| Date
Released: |
11/18/09 |
| Next
Release: |
11/25/09 |
| p-Preliminary |
|
Analysis for the Housing Market
By:Ken Lee
In the week ending November 13th, the MBA’s seasonally-adjusted purchase index dropped 4.7% from the previous week and was down 15.36% compared to the same time last year. This is the sixth straight week that purchase applications have declined and the lowest the purchase index has been since November 1997.
The Market Composite Index, which is a measure of mortgage loan application volume, declined 2.5% on a seasonally-adjusted basis from the previous week. Drops in both refinance and purchase activity caused overall mortgage application to fall last week. Refinances continue to account for the bulk of mortgage application activity with 72.9% of total applications.
The share of adjustable-rate mortgages (ARMs) declined to 5.4 from 5.5% in the previous week. ARM activity should continue to remain historically low as less banks are offering riskier adjustable rate mortgages while buyers opt for more secure fixed-rate loans.
Definitions and Importance for the
Housing Market
By:Ken Lee
A purchase mortgage application occurs when a potential purchaser (buyer) submits an application to qualify for a mortgage. Purchase mortgages are tracked separately from refinance mortgages (the issuance of new debt to replace old debt).
Information for mortgage applications is obtained from a survey conducted by the Mortgage Bankers Association, which covers approximately 40 percent of all U.S. retail residential mortgage originations. The survey has been conducted weekly since 1990 and is considered to be highly reliable due to the significant survey sample size. Respondents include mortgage bankers, commercial banks and thrifts. The Mortgage Bankers Association (MBA) uses an index to measure, in constant terms, any fluctuations in the number of mortgage applications issued during a given period. The base period for all indexes is March 16, 1990=100.
Because a mortgage application occurs very early in the home buying cycle, this indicator is a very good predictor of short-term sales. Because it is a weekly survey, and there is little lag time, this indicator is very useful for businesses in the home buying industry. It is important, however, not to overreact to one bad week.
|
