The MBA market index is up 7.4 percent in the February 3 week after a decline in the prior week. It is up 33.6 percent from four weeks ago, and down 56.1 percent from a year earlier. The MBA noted that the rate for a 30-year mortgage has now been down for the fifth straight week. MBA Deputy Chief Economist Kan said the current rate is nearly one full point below the recent high of 7.16 percent in October 2022. He said that while rising rates put some homebuying on hold last year, homebuying"is gradually coming back as rates ease and housing demand remains strong".

The contract rate for a 30-year fixed rate mortgage is 6.18 percent in the February 3 week, down 1 basis point from the prior week, down 24 basis points from four weeks earlier, and up 235 basis points from a year earlier. Lower mortgage rates mean better home affordability and could give a boost to what promised to be a lackluster spring buying season.

The purchase index is up 3.1 percent from the prior week, up 19.2 percent from four weeks earlier, and down 32.7 percent from a year ago. The refinance index is up 17.7percent week-over-week, up 68.1 percent from four weeks ago, and down 74.8 percent from the same time last year. People who plan to buy a home in the coming months may be locking in a lower rate while they shop. Refinancing activity remains much softer than around this time last year when refinancers were acting to do so before mortgage rates went up. However, the current increase may be in part due to recent homebuyers refinancing at a lower rate or homebuyers who have an adjustable rate mortgage getting a fixed rate.

The February 3 index for fixed rate mortgages is up 7.4 percent from one week ago, up 34.5 percent from four weeks earlier, and is 57.0 percent lower than a year ago. The index for adjustable rate mortgages is up 6.9 percent week-over-week, up 22.0 percent from four weeks ago, and down 34.9 percent from a year ago. Homebuyers are opting for fixed rate mortgages where possible, but willing to take out an adjustable rate if that secures their home purchase. Some buyers may be willing to purchase using an ARM loan in anticipation of a chance to refinance at a more affordable fixed rate later.

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.

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.