mortgage applications

Wednesday last week a pretty astonishing piece of data came out. After the Fed extended its new credit facilities (and maybe the rate cut in Australia and the Bank of Japan's acceptance of BBB corporate debt as collateral for loans) mortgage rates in the US shot down on that. Mortagage applications (obviously) shot up on that. By 112%! My sales guy at Goldman, had sent out this little thing then:

"HUGE leap in mortgage applications
See attached chart - as the Fed has finally engineered a rally in mortgage
rates (origination now coming in 4.5s), mortgage applications jumped by 112%
(week over week change). Refinancing jumped by 203%. while this is only one
week of data, its a step in the right direction and should make the Fed happy
to see..."

The chart he had attached to that was truly impressive:

The white line is mortgage rates, the orange line is % increase in mortgage applications. But an increase like that for one week could easily be a dataglitch. And indeedy, today the release came out as:

MBA Mortgage Applications (United States)
OBSERVATION PERIOD: DEC 5 (Weekly)
ACTUAL : -7.1%
PRIOR : 112.1%
REVISED : - -
SURVEY : - -

And it made me think that it was nothing more than a dataglitch. But then I realized: Wait, that's 7% off the level applications had risen to last week. Below is a similar graph as the previous one except with absolute mortgage application levels instead of changes:


For someone like me who thinks that a stabilization in housing prices is the first necessary condition for economic recovery, this is encouraging... even though still just the first step in that direction. The very very first.