Mortgage applications decreased 4.5% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 17, 2012. The Refinance Index decreased 4.8% from the previous week. The seasonally adjusted Purchase Index decreased 2.9% from one week earlier. The unadjusted Purchase Index increased 1.4 percent compared with the previous week and was 9.2 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 0.30%. The four week moving average is down 3.21% for the seasonally adjusted Purchase Index, while this average is up 0.33% for the Refinance Index. The refinance share of mortgage activity decreased to 80.1% of total applications from 81.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% from 5.4% of total applications from the previous week.

Mortgage applications decreased 4.5% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 17, 2012. The Refinance Index decreased 4.8% from the previous week. The seasonally adjusted Purchase Index decreased 2.9% from one week earlier. The unadjusted Purchase Index increased 1.4 percent compared with the previous week and was 9.2 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 0.30%. The four week moving average is down 3.21% for the seasonally adjusted Purchase Index, while this average is up 0.33% for the Refinance Index. The refinance share of mortgage activity decreased to 80.1% of total applications from 81.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% from 5.4% of total applications from the previous week.

At 10:00 AM EST January Existing Home Sales increased 4.3% fr0m December against forecasts of +1.6%. December sales however were revised to -0.5% from +5.0%. According to NAR there is a 6.1 month supply of homes; -0.4% to 2.31 mil the lowest level since March 2005. Distressed sales accounted for 35% of all sales com[pared to 32% in Dec. There was little initial reaction to the report.

A couple of technical levels tested and held yesterday; the 10 yr note yield increased to 2.06% where we have support at 2.08% area, the DJIA tested 13K yet backed away into the close (12,996). Prior to 9:30 AM EST the DJIA traded down just 4 points while the 10 yr note at 2.05%; not much change from yesterday’s closes (MBS prices at 9:00 AM EST +1/32 (.03 bps).

Fitch lowered the rating of Greek debt to C from CCC, saying Greece is highly likely to default on its debt. US treasuries are also betting that Greece will default, as a reaction the US bond market will continue to be well supported on sell-offs. Pulling the other direction, investors are increasing concerns on inflation to six month highs in trading of Treasury Inflation Protected securities. Inflation fears won’t dissipate with interest rates at these low levels, however we see little pricing pressure in labor costs or commodities like crude oil. Crude has jumped over $6.00/barrel in the last couple of weeks, mostly on Iranian fears, when global equity markets increase crude follows but higher energy prices will very likely curb discretionary consumer spending and dampen the optimistic economic outlook.