The MBA mortgage applications index is down 0.8 percent in the August 11 week. It is down 8.4 percent from four weeks ago, and down 29.4 percent from a year earlier. MBA Deputy Chief Economist Joel Kan said,"The 30-year fixed mortgage rate increased for the third straight week, reaching 7.16 percent, matching October 2022's rate and the highest rate since 2001." He continued,"Overall applications decreased because of these higher rates, as both purchase and refinance applications ended the week at their lowest levels since February 2023."

The purchase index is down 0.3 percent from the prior week, down 8.4 percent from four weeks earlier, and down 26.6 percent from a year ago. The refinance index is 1.9 percent lower week-over-week, down 8.5 percent from four weeks ago, and down 34.9 percent from the same time last year. Refinancing accounted for 28.6 percent of total applications in the week compared to 28.7 percent in the prior week.

The August 11 index for fixed rate mortgages is down 0.8 percent from one week ago, down 9.0 percent from four weeks earlier, and is 29.4 percent lower than a year ago. The index for adjustable rate mortgages is up 0.2 percent week-over-week, up 1.1 percent from four weeks ago, and down 29.1 percent from a year ago. Adjustable rate mortgages account for 7.0 percent of total applications in the August 11 week, up from 6.9 percent in the prior week. While homebuyers generally prefer fixed rate mortgages, home prices remain elevated and access to mortgage credit tighter. For many buyers, an adjustable rate mortgage improves initial affordability. Most will hope for a chance to refinance at a lower rate later before the rate resets..

The contract rate for a 30-year fixed rate mortgage is 7 basis points higher to 7.16 percent in the August 11 week, up 29 basis points from four weeks ago, and up 171 basis points from a year earlier. It is the highest since November 2022. The rate for a 5-year adjustable rate mortgage is 6.20 percent, down 16 basis points from the prior week, down 7 basis points from four weeks earlier, and up 177 basis points from the year-ago week.

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.