Last week, as every other publisher and advisor wrote about the sharp and “worrisome” drop-off in weekly mortgage applications, I told you not to panic about the 14.9% decline. I even advised that this week’s data would mark a solid rebound. Well, in fact, the data played true to our forecast and the Mortgage Bankers Association’s (MBA) Weekly Applications Report showed a 4.9% increase week-to-week.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Our Mortgage Activity Forecast was Proven Correct Today
Simply go back and read our report and you’ll understand why mortgage activity improved impressively this week. It was neither a matter of a dramatic turn in housing or due to a legislative catalyst. The President’s initiative to open up refinancing opportunities to more borrowers will come into play moving forward.
Mortgage rates did not affect activity either in the latest reporting period, as they were little changed. The average contracted rate of 30-year fixed rate mortgages with conforming loan balances was literally unchanged, while jumbo loans of the same duration saw a rate increase to 4.68%, from 4.64%. FHA sponsored loans marked a negligible rate decline to 4.11%, from 4.12%. And contracted 15-year fixed rates were up to 3.62%, from 3.61%, on average.
What came to play this week was a simple matter that much higher paid publishers than I missed. I’ve pointed out on many occasions that data reporters tend to make poor adjustment for holidays, especially three-day weekends. The adjustments often fail to adequately account for the lull in activity that occurs on the day before the holiday begins and after its passage. “It’s as simple as that, you see yeah” quoting a favorite band of mine - Live.
The MBA’s Market Composite Index improved 4.9%, as the Refinance Index gained 4.4%. The Purchase Index, which measures applications on the purchases of homes, increased 6.4%. That was another uncharacteristically large move in purchase activity and the give-away factor. It was due to the noise disruption of the data by the Columbus Day holiday. It’s as simple as that you see. We’ll look forward to a normalized reading next week.
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