WASHINGTON (11/14/13)--Data published on Wednesday indicate that the mortgage market receded for a second consecutive week as three key interest rates increased in unison for the first time in over two months.
But the industry's woes, as measured by the Mortgage Bankers Association, aren't as severe as initially feared. Wednesday's release showed that the MBA composite mortgage applications index decreased by 1.8% in the week ending Nov. 8.
Applications decreased by 2.8% the week ending Nov. 1--a decline that was initially measured at 7% before being revised downward this week (CNBC.com Nov. 13). Data from the week ending Nov. 1 were updated after the MBA found that purchasing and refinance activity, the two inputs of the composite index, fell by 0.7% and 3.9% respectively--the MBA initially said that the two measures had plunged by 5.2% and 7.9%.
For the week ending Nov. 8, purchase and refinancing activity was down by 0.5% and 2.3%, respectively, MBA said.
Contributing to the contraction of demand, 30-year fixed-interest mortgage rates, 30-year jumbo mortgage rates and five-year adjustable mortgage rates all increased by 12, 11 and three basis points, respectively. It was the first time since the week ending Sept. 6 that all three key MBA measures increased--a trend that could continue if markets believe that the Federal Reserve will slow its asset purchase program, said CNBC.com (Nov. 13).
Fed officials' recent remarks and stronger-than-anticipated non-farm payroll data released on Friday fueled fears that the central bank will act in such a manner, increasing the possibility that consumer financial markets will become more bearish over the next few months, CNBC.com said. Those anxieties are compounded by congressional budget negotiations and the threat of another partial government shutdown or debt-ceiling breach at the start of next year, and by weak post-recession wage and job growth (Economy.com Nov. 13),
The most recent data already show that housing market activity is historically lackluster. The four-week moving average of the MBA composite activity index was up by 7% over the past month, but down by 53.8% on an annual basis. Refinancing activity, at a 2.5-low, accounted for 66% of all applications.