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Mortgage Applications Bounce For Second Week Despite Cranking Rates

  • MBA mortgage purchase applications in the week ending May 6 rose for the second week running despite rates cranking higher.
  • The 30Y average mortgage rate jumped 17bps to 5.53%, a new high since May’09 and prior to that Nov’08, mirroring the latest 17bp rise in the Freddie Mac 30Y rate of 5.27% after the week before.
  • Whilst continued new borrowing at these higher rates could hurt household balance sheets, yesterday's NY Fed report on household debt for Q1 showed it's starting from healthy base, with loan delinquency extremely low by historic standards and not really rising.

MBA 30Y contract rate (yellow), 30Y Tsy yield (pink) and MBA purchase applications index (red) Source: Bloomberg

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