US: MBA Mortgage Applications


Wed Jun 27 06:00:00 CDT 2018

Actual Previous
Composite Index - W/W Change -4.9% 5.1%
Purchase Index - W/W Change -6.0% 4.0%
Refinance Index - W/W Change -4.0% 6.0%

Highlights
Mortgage activity quieted in the June 22 week as purchase applications for home mortgages decreased from the prior week by a seasonally adjusted 6 percent while applications for refinancing were down by 4 percent. Unadjusted, purchase applications were 1 percent higher than in the same week a year ago, back in positive year-on-year territory after turning negative in the prior two weeks. The refinance share of mortgage activity rose by 0.8 percentage points to 37.6 percent. The average interest rate for 30-year fixed rate conforming mortgages ($453,100 or less) rose 1 basis point to 4.84 percent.

Definition
The Mortgage Bankers' Association compiles various mortgage loan indexes. The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.

Description
This provides a gauge of not only the demand for housing, but economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the Mortgage Bankers Association purchase applications, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once a home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, housing construction has a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the MBA purchase applications index carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.