Mortgage Applications Paint A Mixed Picture

Slow home-building activity and price-deterioration will continued to be part of the housing sector at least, until mid fiscal 2009, where analysts predict the sector to bottom. Housingwire through a piece it published Wednesday morning – is offering a sense of what kind of mortgage applications volume the housing market is currently experiencing.

[Via Housingwire]

Well-publicized application data from the Mortgage Bankers Association suggested that mortgage applications increased 7.5 percent to 513.4.

The MBA application index is calibrated to March 16, 1990; a reading of 513.4 means that application activity was roughly five times greater than when the index was first established.

Based on these data one would think that loan demand is set to increase. However, the following quotation counters this as an argument.

A separate index maintained by Mortgage Maxx LLC, a company that provides prepayment data to Wall Street researchers, reached a much different conclusion earlier in the week: the company’s Max index found that applications actually fell slightly, off 0.2 percent from the week before.

This marks the second week in a row that the two indexes have yielded opposite results, with the MBA suggesting an increase in applications and the Max suggesting a decrease.

Whether the MBA Purchase Index is a useful tool in predicting future housing activity based on multiple applications, remains debatable. In the meantime, because many homebuyers apply for a mortgage before purchasing a home, the Mortgage Application Purchase Index is one of the leading indicator of future home sale activities and an early gauge of economic strength.

On a separate note: A good majority of builders and lenders in different regions of the country that did not make widespread use of sub-prime loans or significantly overbuild, see the current market conditions to have improved considerably, signaling positive outlook.

The national overnight average 30 years fixed rate is 6.23% from last week’s 6.16%.

national mortgage rates

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About Ron Haruni 1068 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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