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.
- Aside from the existing home sales data, the only other data of note out today is the weekly mortgage purchase applications by Mortgage Bankers Association. It showed applications to buy a home fell 1 percent in the past week after accounting for the usual seasonal patterns. It has risen in the past 3 weeks.
- Something appears amiss with this data. It still implies lower home purchases compared to one year ago. That is not the case, at least as evidenced by the sales count through the MLS in vast parts of the country.
- The discrepancy between mortgage applications and home sales could be due to several things. Mortgage data does not say anything about approval rates. Assuming a reasonably similar approval rate now as in the past, then the rise in applications would imply more home buying through mortgages. If the approval rates are improving then the 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 completed all-cash, completely bypassing the mortgage process, and there have been slight upward trends towards cash in the past year.
- For mortgage brokers, business in refinance also matters and refinance activity fell for the fifth straight week. There could be a temporary pickup in refinance in upcoming months from the expanded HARP program that permits responsible underwater homeowners to refinance. But by the year's end and next year, the refi business is expected to be essentially dead because of higher mortgage rate conditions.