Checking the Health of the Housing Recovery

Waiting for the pain in residential real estate to end? BusinessWeek asked experts what to watch now

By Ben Steverma

There are yet more signs that the crippled U.S. housing sector is getting back on its feet. On Nov. 23 news arrived that U.S. existing home sales jumped 10.1% in October. Homes were bought and sold at the rate of 6.1 million per year—much better than the 4.5 million rate in the beginning of the year. More data are expected in coming days on home prices and new-home sales.

"We've seen some more encouraging data [on] the housing picture, but we're not out of the woods," says Michael Sheldon, chief market strategist at RDM Financial Group. The challenges remaining for residential real estate include the many foreclosed homes moving onto the market, a large inventory of unsold homes, questions surrounding the federal government's efforts to stimulate housing sales, and broader economic weakness that saps Americans' ability to buy.

Press Release - Weekly Application Survey

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Title:

Mortgage Applications Decrease in Latest MBA Weekly Survey

Source:

MBA

Date:

11/25/2009

Contacts:

Name:	Phone:	Email:
Carolyn Kemp	(202) 557-2727	ckemp@mortgagebankers.org

WASHINGTON, D.C. (November 25, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 20, 2009. The Market Composite Index, a measure of mortgage loan application volume, decreased 4.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5.8 percent compared with the previous week.

The Refinance Index decreased 9.5 percent from the previous week and the seasonally adjusted Purchase Index increased 9.6 percent from one week earlier. The unadjusted Purchase Index increased 4.9 percent compared with the previous week and was 13.7 percent lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 0.5 percent. The four week moving average is down 6.4 percent for the seasonally adjusted Purchase Index, while this average is up 4.0 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 71.7 percent of total applications from 74.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.3 percent from 5.1 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.82 percent from 4.83 percent, with points increasing to 1.19 from 1.18 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages remained flat at 4.32 percent, with points increasing to 1.05 from 1.01 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.66 percent from 6.85 percent, with points increasing to 0.33 from 0.29 (including the origination fee) for 80 percent LTV loans.

The survey results released last week for the week ending November 13, 2009 were revised and the changes reported in this week’s results reflect that revision. One participant revised its data submission to show higher application volume, as well as a reclassification of some loans from purchase to refinance. As a result, the revised purchase application number is slightly lower than what was reported and the revised refinance number modestly higher.

If you would like to subscribe to MBA’s Weekly Applications Survey, please contact MBA Research at (202) 557-2830 ormbaresearch@mortgagebankers.org or click here.

Media inquiries should be directed to Carolyn Kemp at (202) 557-2727 or ckemp@mortgagebankers.org.

The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.