Reading Rates: MBA Application Survey – October 19 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) increased 7 basis points to 4.26% since last week while the purchase application volume declined a notable 8.8% and the refinance application volume plunged 16.6% over the same period.

With rates at or near generational lows (including the 10-year T-Bill) and the FOMC members becoming more dovish by the day, it will be interesting to see where rates will go as clear details of QE3, likely to be focused more on long term rates, are revealed.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings October 2011

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that all measures increased in October with the composite HMI index climbing to 18 while the "buyer traffic" index remained near record lows as home builders continue to plod through the weakest activity seen in generations.

While all indicators made notable increases in October, it's important to note that conditions still remain at epically distressed levels.

The new home market will likely not resume any significant form of healthy function until the considerable overhang of inventory is cleared.

Hong Kong Bubble?: Hong Kong Residential Property Prices August 2011

Today, the University of Hong Kong released their Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in August, the price of residential properties declined 0.30% since July but climbed 20.4% above the level seen in August 2010.

It appears that after a stunning run of monthly increases that saw prices increase dramatically, prices are beginning to show a pullback of sorts with the most measures declining on the month.

The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.