MBA: Mortgage Purchase Applications Jump To 12-Week High

Despite the 30-year fixed rate mortgage remaining unchanged at 5.34%, the seasonally adjusted mortgage purchase application index jumped 6.7% to 285.6 for the week ending July 3rd.

This is the highest the index has been since the week of April 3rd when it rose to 297.7 and the 30-year fixed was at 4.73%.

Additionally, the four-week moving average for the purchase index, a more consistent indicator, shows that the purchase index is up 1.4% despite the fact that mortgage rates have spiked this past month.

New data continues to reveal that demand for real estate has been unaffected by rising rates, much in the same way the market never actually benefited from the plunge in rates over the past couple of months.

Here is a comparison between NAR's seasonally adjusted existing home sales and Freddie Mac's 30-year fixed rate mortgage survey over the past several months, this data reveals that record low mortgage rates have had no meaningful impact on demand. You can call it the law of diminishing returns, price inelasticity, beating a dead horse, whatever, this is a concept that I have wrote about on more than one occasion.

Sep 2008: 5.10 million sales / 6.04%

Oct 2008: 4.94 million sales / 6.20%

Nov 2008: 4.54 million sales / 6.09%

Dec 2008: 4.74 million sales / 5.29%

Jan 2009: 4.49 million sales / 5.05%

Feb 2009: 4.71 million sales / 5.13%

Mar 2009: 4.55 million sales / 5.00%

Apr 2009: 4.66 million sales / 4.81%

May 2009: 4.77 million sales / 4.86%

In order to stimulate new demand for real estate so that the excess inventory can be absorbed and home values can stabilize, it is going to require fiscal policy, not the Fed's funny money monetary policy.