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MBA Announces Average 30 Year Fixed Rate Mortgage Surges From 5.04% To 5.31%: Highest Since August 2009
A few days ago we demonstrated the spike in Freddie 30 Year Fixed Rate Mortgages which hit a near 2010 high of 5.08 after being as low as 4.93% a few weeks prior. We speculated that the end of QE is starting to be felt much earlier than anticipated. Today's release of the Mortgage Brokers' Association of the Weekly Application Survey confirms this: the MBA discloses that the average contract interest rate for the 30 Year Fixed Rate Mortgage has surged from 5.04% to 5.31% - the highest 30-year rate recorded in the survey since August of 2009. Discussing this event, the MBA said:"“Mortgage rates jumped last week as the Federal Reserve completed their
purchases of mortgage-backed securities. Refinance application
volume dropped as mortgage rates reached their highest level since
August 2009." With rates surging on the back of the recently breach of 4% in 10 year rates, this has pretty much made sure the Fed will soon need to get involved again. A 1% rise in mortgage rates is equivalent to a loss of a few hundred billion in household net worth. Just as the bond vigilantes are calling Greece's bluff (and winning soundly) so the mortgage vigilantes are stirring.
From the MBA:
The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending April 2, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 11.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10.5 percent compared with the previous week.
“Mortgage rates jumped last week as the Federal Reserve completed their purchases of mortgage-backed securities,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance application volume dropped as mortgage rates reached their highest level since August 2009. Purchase volume was essentially unchanged relative to the prior week going into the Easter weekend.”
The Refinance Index decreased 16.9 percent from the previous week and the seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 0.5 percent compared with the previous week and was 18.1 percent lower than the same week one year ago. The government purchase index increased significantly for the third straight week and as a result, the government share of purchase applications increased to 49.9 percent, its highest level since February 1990 and the third highest level in the history of the data.
The four week moving average for the seasonally adjusted Market Index is down 3.8 percent. The four week moving average is up 3.2 percent for the seasonally adjusted Purchase Index, while this average is down 6.9 percent for the Refinance Index.The refinance share of mortgage activity decreased to 58.7 percent of total applications from 63.2 percent the previous week, marking the lowest share observed in the survey since the week ending August 28, 2009. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent from 5.2 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.31 percent from 5.04 percent, with points decreasing to 0.64 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the highest 30-year rate recorded in the survey since the first week of August 2009. The effective rate also increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.54 percent from 4.34 percent, with points decreasing to 0.92 from 0.98 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.
The average contract interest rate for one-year ARMs increased to 7.03 percent from 6.88 percent, with points decreasing to 0.29 from 0.31 (including the origination fee) for 80 percent LTV loans.
With the euro on its deathbed, it really sets the stage for a very interesting lap in the currency debasement race once Bernanke is forced to print another trillion to extend QE should the 30 Year hit 5.5% as soon as two weeks after the end of MBS purchases. Should today's trendline continue, this is pretty much guaranteed.
h/t Steve
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That should spark a rally on the NYSE...
Well risk is certainly part of it, but doesn't demand also drive mortgage rates as well?
If rates were linked to demand a higher mort. rate would = more demand correct? Not sure this is the case according to the numbers.
Fed holds rates down decapitating savers while the banks now put their growing "excess capital" out at higher yields. presto - NIM expansion. FASB says house prices only go up
Gold, unfettered, knows the truth. $1147 just this minute. JPM best get some shorts on, you are exposed.
TPTB need to get maximum bang for the buck in crashing equities hard Ms. C. Gold will be one of many categories to get whacked as people delever to fill the TOMO void.
This movement is nothing.
Here in America we take for granted money is free as in some other parts of the "developed world" polluted by US printting presses.
Amenicans feel entitled to have:
Elsewhere in the World (The world does not end by the Niagara falls or the Arizona desert) things are different; Money costs, you pay your heathcare, rates take in account risk, and a 15% to 20% down is paramount.
Yes, living entitled is a DREAM.
Yes, USA its growing at the expense of the rest of the world.
There is a world outside and is not like this Big Fasade Ponzi.
"I know you rider...."
Gonna miss you when I'm gone
Let me state the obvious reason for the rate rise...
People who can't print money want more reward for risking their money with an overpriced asset as collateral.
Absolutely correct.
Oil is telling us that Ben's hands are now tied. He is cornered.
* QE2 = $120++ oil, consumer in US is killed, business costs skyrocket, airlines collapse again, etc etc. Potential unrest at ultra-high gas prices during massive unemployment
Is it too late, or can we still catch Greece?
QE II to start in ten minutes.
Is it possible for Balnkfein to start a massive panic in Greek debt (as opposed to the recent "slow bleed") by shorting Greek debt or aggressively pulling the appropriate derivative levers? That way the Euro will get creamed, and a flight to safety in the buck and hence Treasuries will drive our rates back up and save housing - again.
You know. Beggar thy neighbor.
Higher interest rates for mortgages with stagnant wages for Americans will further reduce demand for housing & depress home values. The second wave of RE speculators & flippers will wake up someday to find their houses going down in price with decreasing demand as they try to dump them into an oversupplied market. Too much Kool-Aid for that lot.
Move along....and buy stocks. Nothing to see folks.... The smoke is not yet clearing...the mirrors are still working fine.
Sixteen minutes until we see a perfect 10-yr auction, propped by US taxpayer dollars in an ever growing incestous CF of the US buying its own debt.
Wait... if we pay ourselves back some horribly high interest, WE WIN!
Hey, if I'm a US citizen, can I butt in line in front of China when we all can't get paid back?
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