This morning's news that the Institute of Supply Management's index of activity in the service sector of the economy slumped a surprising 4.5% in April has proven supportive of fractionally higher mortgage prices in today's early trading.


Most investors appear to view today's sharp drop in the ISM service sector index a bit skeptically. The swoon in this economic benchmark stemmed from the largest decline in the new orders component of this data set since the ISM first began compiling this index 13 years ago. The April decline for new orders is larger than after 9/11, and larger than the mark set following Hurricane Katrina. Just two months ago this index hit a six-year high. While a plunge of the magnitude registered in today's report is certainly possible - most investors will likely need to see other separate but validating reports before beginning to aggressively price-in the likelihood the economy is slipping back into a recession.


In a separate report the Mortgage Bankers of America said the mortgage loan applications rose 4.0% on a week-over-week basis. Refinance applications rose 6.0% during the week ended April 29th while purchase money requests were up a modest 0.3%. Six out of every ten loan applications taken last week were for refi's. The average national contract rate for 30-year fixed-rate mortgages finished the week at 4.76%, down 17 basis points from four weeks ago, down by 26 basis points from the month-ago mark, and down 26 basis points from year-ago levels.