Mish's Global Economic Trend Analysis: "U.S. mortgage applications rose for the first time in four weeks, led by a rebound in home purchase loans despite interest rates hitting their highest this year, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended April 28 increased 8.8 percent to 596.8 from the previous week's 548.6.
The MBA's seasonally adjusted purchase mortgage index rose 11.3 percent to 433.3 from the previous week's 389.4, which was its lowest level since November 2003.
However, the index -- considered a timely gauge of U.S. home sales -- was below its year-ago level of 482.5.
'The jump in activity was a little surprising given that mortgage rates have been rising, but on a week-to-week basis the index can be volatile,' said David Sloan, senior economist at 4CAST Ltd. in New York. 'Higher rates will eventually send the index lower.'
I thought the jump in activity was a little surprising as well, although as Sloan says the 'index can be volatile'. I asked Mike Morgan at MorganFlorida if he could step outside Florida and comment on the numbers. Here was his reply:
A year ago most speculators did not have to close on homes. They could simply flip their contracts prior to closing. No need to apply for a mortgage. That was shut down starting about a year ago. So we actually have a double counting of mortgage applications being reported now. The flippers that never had to get a mortgage before now have to get a mortgage and close, even if they are flipping the property the same day and the new buyer has to get a mortgage. So not only are mortgage applications not realistically up, but they are substantially down. The Fed and MBA is double counting mortgage apps for those flippers that only ne"
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