October 8, 2009

Weekly Mortgage Market Update; Mortgage Bankers Association for the week of October 7, 2009



Market Composite Index: (loan application volume) increased 16.4 percent on a seasonally adjusted basis from one week earlier.

Refinance Index: Increased 18.2 percent from the previous week, following the third consecutive week where the 30-year fixed mortgage rate was below 5 percent, and is at its highest level since mid-May.

Conventional Purchase Index: Increased 13.2 percent from one week earlier, which puts the index at its highest level since January

Refinance Share of Mortgage Activity: Increased to 66.3 percent of total applications from 65.3 percent the previous week.

ARM Refinance Activity: Decreased to 6.1 percent from 6.2 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org) Third quarter real gross domestic product (GDP) is now expected to increase to almost 3.0 percent annually, with inventory investment and residential construction playing critical roles. Together, these two sectors contributed -2.0 percentage points to the annual rate of change of real GDP in the second quarter. In the third quarter, their contribution will probably add about 1-1/2 percentage points, thus accounting for the bulk of the expected turnaround in economic growth from the second to the third quarters.

The MBA outlook indicates the economy will likely shed jobs for the coming months even as real gross domestic product (GDP) may have started growing in the third quarter, implying another surge in productivity growth during the quarter. The near-term prospects for solid growth in consumer spending, therefore, are not bright, and that constitutes the major downside risk to this month’s forecast.

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