Every week, the Mortgage Bankers Association releases its count of applications for new loans, both refinance and purchase. It is worth watching, but carefully, and yesterday’s report raises an important issue.
- 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.