Mortgage Apps: Rates Over 7.50%, Jeopardizing Recovery

Bottom Line: Mortgage activity fell again last week, hitting a record low as the average 30-year fixed-rate mortgage pushed above 7.50%. While secondary mortgage market spreads to Treasuries stabilized in the last week, Treasury yields continued to push higher. Purchase applications and those for refis were lower last week. Overall, application volumes suggest that mortgage rates are jeopardizing the recovery in housing activity.

The MBA Mortgage Application Index FELL -4.2% to 185.0, BELOW the 13-week average of 202.0 and -31.6% BELOW the year-ago level. Non-seasonally adjusted the index FELL -5.6%. The Purchase Index FELL -5.0% to 142.0, BELOW the 13-week average of 158.0 and -30.0% BELOW the year-ago level. The Refinancing Index FELL -2.8% to 397.0, BELOW the 13-week average of 423.0 and -34.9% BELOW the year-ago level. The effective (adjusted for points paid) 30-year mortgage rate ROSE 18bps to 7.54%, ABOVE the 13-week average of 7.13% and 29bps ABOVE the year-ago level. Current coupon yields in the secondary market were up 16.0 bps last week , closing at 6.14%, and were up 9.0 bps this week through Tuesday.