Is the Subprime Meltdown Skewing Mortgage Data?

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I'm a big fan of the Mortgage Bankers Association index of weekly mortgage applications. It is a timely measure of the strength of the housing market and the demand for refinancing. However, the data lately may be somewhat skewed because of the collapse of the subprime market. The index covers roughly half of all loan issuing institutions, but it is probably reasonable to assume that the institutions specializing in subprime loans are under-represented in this sample. This means that as these institutions have closed or cutback their lending, more of their customers would be showing up at the financial institutions covered in the survey, leading to an upward bias. In other words, the data must be viewed with more caution than usual.

--Dean Baker

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