Whoopsie! Mortgage Applications Dive 11.5% As Rates Surge And ADP Employment Misses

Confounded Interest ^ | 06/05/2013 | Anthony B. Sanders

[whitedog57]

The 10 year Treasury yield has surged 50 basis points since May 2nd and mortgage applications dropped like a rock. According to the Mortgage Bankers Association (MBA), the Refinance Index decreased 15 percent from the previous week and is at its lowest level since the end of November 2011.

The HARP share of refinance applications has been unchanged at 32 percent for the past three weeks. Declining mortgage refi applications (the refinance share of mortgage activity is 68 percent of total applications) and declining bank net interest margins are not good news for banks.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier.

Now, how do we have a sustainable housing recovery with declining mortgage applications? Only if investors stay in the game.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.07 percent, the highest rate since April 2012, from 3.90 percent, with points decreasing to 0.35 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This was the largest single-week increase in this rate since the week ending July 1, 2011.

Not only have mortgage rates (and Treasury yields) risen, but ADP employment grew 135,000 in May. While employment growth is good, analysts were expecting 165,000!

Similarly, factory orders grew 1.0% in April. But analysts were expecting 1.5%.

Based on this less than stellar performance, the 10 year Treasury yield rose 5.2 basis points as of 11:24am today, but remains above 2%.

[whitedog57]

How do you have a sustainable housing recovery with dropping mortgage purchase applications????

[Cold Heat]

The usual “spring fling” that the markets were trying very hard to call a recovery, is coming to a end.

Sure, there has been a increase in re-fi’s and there has been a large number of homes snapped up by investors and flippers, but nothing else that usually goes along with a recovery seemed to be there in the data like gasoline usage, electricity needs and the like.

All I see is inflation.

In any case, it did not look much like a recovery to me, but then maybe I am just too jaded to see it....lol maybe I need to go to re-education camp.