Posted on 05/08/2013 8:04:44 AM PDT by whitedog57
According to the Mortgage Bankers Association, the Refinance Index increased 8 percent from the previous week to the highest level since December 2012. The gain in the Refinance Index was due to increases in both the conventional and government refinance indices of 8.8 percent and 5.7 percent respectively. The seasonally adjusted Purchase Index increased 2 percent from one week earlier to the highest level since May 2010.
Here are mortgage purchase applications over the past 12 months.
On a longer view, you can see that this is the highest level since 2010.
Mortgage refinancing applications continue to rise as well.
Also from the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.59 percent, the lowest rate since December 2012, from 3.60 percent, with points increasing to 0.33 from 0.30 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
On a related front, the mortgage giant Freddie Mac just posted their second largest quarterly profit in history. And Freddie Mac will pay Treasury $7 Billion on their quarterly profits.
And Bill Gross tweeted that The Fed will have to keep their foot on the gas to sustain this rally.
Keynesian economics, at its finest.
The theory was, solution to a poor economic state was to “prime the pump.” Keynes argued that the government should step in to increase spending, either by increasing the money supply or by actually buying things itself. During the Great Depression, however, this was not a popular solution.
And it is a particularly unpopular solution today, even in the face of the insistence of the Current Occupant of the White Hut and his clever wizard, Ben Bernanke, that a perpetual pumping up of the money supply goes on and on.
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