Mortgage applications rose 7.4% WoW for the week ending December 1st, 4.6% higher than the growth rate of last week which stood at 2.8%. Like last week's release, the increase in applications can be attributed to the following 3 things:
Falling 15-year fixed rate mortgage. During the survey week of the report, the 30Y was at 6.56%, down from 6.67%. Currently the 30Y stands at 6.29%.
Falling 15-year fixed rate mortage, which was at 7.22%, down from 7.29% when the report was conducted. The 15Y now stands at 7.03%.
Higher number of those refinancing. The Refinance index rose 19.42%, making refinances account for 39.2% of the mortgage applications. This is an increase from the 13.88% increase in the Refinance Index last week and a 34.7% share of remortgage applications.
Going forth, it is likely that next weeks Mortgage Applications report will show another rise in those applying for mortgages given the fall in the 15 and 30 year fixed rate mortgage as of wednesday. However, it is also likely that the rate of refinances will increase, abiding by the current trend and demonstrating that the current drive in applications can largely be attrbibuted to those either being forced to, or voluntarily, refinancing.
In my opinion, this trend in refiancing is rather dangerous as it represents more homeowner income going towards paying occuption costs. This leaves less money to spend on other goods and therefore, may hamper wider consumer demand and tolerance for high ticket items. Additonally, the increase in occuption costs may also be reflected in growing rental prices, one of the main drivers of the most recent CPI release. Thus, watching the refinance index is likely to be of some significance in the weeks to come. Below is the refinance index - watch it.
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