Mortgage Purchase Applications

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications.
  • Mortgage applications to buy a home rose by 4 percent in the past week, after accounting for the usual seasonal patterns.  The latest trend also marks three consecutive weeks of gains.
  • The latest index value of 186.5 still represents only a small gain from the cyclical low point.  The index would need to rise another 10 percent to breakout of the basement for good in regards to mortgage activity for home buying.
  • Mortgage application data does not say anything about approval rates.  Assuming reasonably similar recent approval rates as in the past, then a rise in applications would imply more home buying through mortgages.  If the approval rates are improving than actual home sales could be even stronger than suggested by just the mortgage applications data.    Also be mindful that about one-third of all home purchases are all-cash, completely bypassing the mortgage process.
  • For mortgage brokers, refinancing also matters and refinance activity fell for the fourth straight week.  There could be a temporary pickup in refinance in the upcoming months from the expanded HARP program that permits responsible underwater homeowners to refinance.  But by the end of the year and into next year, the refi business is expected to be essentially dead because of higher mortgage rate conditions.
  • On a separate data note, import prices coming into the U.S. in February were clocking in at 5.5 percent higher from one year ago.  Though potentially hurting American consumers, it is a deceleration from double-digit gains of last year.  At the same time, the export prices we were charging abroad rose by 1.5 percent.  The weaker price gain was driven by U.S. farmers getting lower prices in selling abroad after the price spikes of last year.  If agricultural and livestock prices retreat, then farm values, which had risen solidly over the past decade, may also begin to slide a bit.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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