• Refis are unbelievably sensitive to changes in interest rates and have nothing to do with the housing market itself.
  • The MBA weekly purchase application figure has been remarkably stable in the last five years. This week’s “seasonally adjusted” jump is meaningless because it followed slow holiday weeks impossible to adjust for.
  • These are MBA-member applications, not including applications taken by banks or brokers.
  • What really happens to purchase applications when rates rise? At this instant, rates are falling a hair, but if the Fed stays on course, then mortgage rates will rise this year.

Every week, the Mortgage Bankers Association releases its count of mortgage applications for new loans, both refinance and purchase. It is worth watching, but carefully, and yesterday's report raises an important issue. Strip the refi fraction out In an era of click-candy headlines, always strip the refi fraction out of the MBA’s count. Refis are unbelievably sensitive to changes in interest rates and have nothing to do with the housing market itself. Lower rates do help the overall market, but only big drops. Refis are triggered by rate declines as small as one-eighth of 1 percent -- about what we’ve seen in the last 10 days, and we may get another eighth in the next week. That’s enough for a huge surge in refis. Seasonally adjusted mortgage application jumps are meaningle...