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Weighing the Relevance of Recent Mortgage Activity
The Mortgage Bankers Association (MBA) reported on mortgage activity Wednesday for the week ending September 2nd. The MBA’s Market Composite Index, measuring general mortgage application volume, fell 4.9%, despite a drop in contracted mortgage rates.
The average contracted fixed rate 30-year and 15-year mortgage rate fell to 4.23% (from 4.32%) and 3.41% (from 3.49%), respectively. Even so, the MBA’s Refinance Index declined 6.3% from the previous week and basically drove the overall decline in mortgage activity. This is because the Purchase Index, which measures mortgage applications tied to the purchase of a home, rose 0.2% on a seasonally adjusted basis.
The illogical decline in mortgage activity can be easily explained by the period measured, which ended just a day before the start of the holiday weekend. This effectively negated at least a day (Friday) from the calculation, since prospective refinancers and home purchasers also take vacations over the Labor Day weekend. The adjustments that the measurers of economic data make to account for such events always take the holiday itself into account, but whether they properly account for the soft days of economic activity that precede and follow the holiday is another issue. For this reason, I think it’s best to keep from making economic forecasts around the period of these anomalies.
That said, I’ve recently documented the many signs of economic deterioration as seen in economic data reported over the last two months within my article, Dead Cat Recession Certainty. And even within this report, there is a bit worth noting. The four-week moving average of the seasonally adjusted Market Index is down 3.2%, with the Purchase Index off 3.7% and the Refinance Index short 3.1%. Since this figure is seasonally adjusted, it should account for a late summer lull in economic productivity and activity. Thus, this may be yet another sign of economic softness in August, which could help put forth economic contraction in Q3. Real estate investors should note that the nascent economic bump in the road also presents a counterproductive catalyst to recently stabilized home pricing.
Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).
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