The MBA market index is down 5.7 percent in the May 12 week. It is up 2.7 percent from four weeks ago, and down 32.7 percent from a year earlier. MBA Deputy chief Economist Joel Kan said,"Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points. Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping nine basis points to its highest level in two months at 6.57 percent."

The contract rate for a 30-year fixed rate mortgage is up 9 basis points to 6.57 percent in the May 12 week, up 14 basis points from four weeks earlier, and up 108 basis points from a year earlier.

The purchase index is down 4.8 percent from the prior week, up 2.4 percent from four weeks earlier, and down 26.5 percent from a year ago. The refinance index is 7.7 percent lower week-over-week, up 4.1 percent from four weeks ago, and down 57.2 percent from the same time last year.

The May 12 index for fixed rate mortgages is down 5.4 percent from one week ago, up 2.4 percent from four weeks earlier, and is 29.9 percent lower than a year ago. The index for adjustable rate mortgages is down 9.4 percent week-over-week, up 7.3 percent from four weeks ago, and down 57.2 percent from a year ago. Consumers continue to prefer fixed rate mortgages over adjustable rate loans.

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.