Home Loan Demand Up as Rates Tumble ???

Reuters reports:

Mortgage applications rose for a second straight week as interest rates sank to their lowest since May, data from an industry trade group showed on Wednesday.

Market analysts, however, say data on mortgage applications may be artificially inflated because prospective borrowers have been filing multiple applications to obtain a single loan due to widespread tightening of lending standards resulting from a sharp rise in defaults in the subprime mortgage market, which caters to borrowers with poor credit histories.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application, which includes both purchase and refinance loans, rose 5.5 percent for the week ended September 7.

Applications were 12.5 percent above their year-ago level. But the four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was down 0.8 percent to 634.2.

Jim Svinth, chief economist at LendingTree.com, an online company that matches consumers with lenders, said lower interest rates made borrowers evaluate their mortgages and options after the Labor Day holiday.

"With today's low interest rates, prime borrowers are realizing they are in the driver's seat and can take action on finding great home loans that match their needs," he said. "With the Fed meeting next week, I feel we'll continue to see more of this type of activity as all signs are pointing to a rate drop on Tuesday."

"We'll have to wait and see if these predictions indeed come true," said Svinth, who is based in Irvine, California.

But market analysts also say the MBA's data may be overstating activity since it includes only retail lenders, which possibly may be experiencing an increase in applications as wholesale lenders pull back from the market right now.

The MBA's data does not cover mortgage brokers, major participants in the loan origination market.

You've got to wonder what good these numbers are when there are so many holes in them.If the MBA doesn't cover mortgage brokers why even come out with these numbers?