Wednesday, August 13, 2003

According to the Mortgage Bankers Association of America,
The contraction in mortgage activity continued last week with the level of refinance applications falling to about a third of what they were when they peaked in late-May and early June.
That's a mighty big drop.

The MBA's Market Composite Index has now fallen to 824.6, from 1856.7 on May 30 -- a 56% drop in 10 weeks. This is the lowest level the index has sat at since July 2002.

Much of that is due to the refi market drying up like a puddle on a sunny sidewalk. The Purchase Index (which measures mortgages for purchasing homes) is now at 409.6, bouncing unevenly down from 460.5 on May 30. More notably, the Refinance Index (which measures mortgages for refinancing existing mortgages) stands at 3238.4, dropping like a stone from 9977.8 on May 30 -- a big 68% plummet.

As a consequence, the refi share of mortgage activity is down to 55.8% of total applications. The high was 77.3% of total applications on June 13, but as recently as July 18 -- just three weeks ago -- the tally was 68.7%.

According to the MBA's chief economist, the refi boom will be over when the refi share gets all the way down to 20-25% of applications. But it looks already like the reverberations of the boom have dissipated and we just wait for the debris to start raining down on us.


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