| Actual | Previous | |
|---|---|---|
| Composite Index - W/W | -4.2% | -0.8% |
| Purchase Index - W/W | -5.0% | -0.3% |
| Refinance Index - W/W | -2.8% | -1.9% |
Highlights
The MBA mortgage applications index is down 4.2 percent in the August 18 week. It is down 10.7 percent from four weeks ago, and down 31.6 percent from a year earlier. MBA Deputy Chief Economist Joel Kan said,""Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high. This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31 percent the highest level since December 2000." He continued,"Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power. Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing."
The purchase index is down 5.0 percent from the prior week, down 10.8 percent from four weeks earlier, and down 30.0 percent from a year ago. The refinance index is 2.8 percent lower week-over-week, down 10.7 percent from four weeks ago, and down 34.9 percent from the same time last year. Refinancing accounted for 29.5 percent of total applications in the week compared to 28.6 percent in the prior week.
The August 18 index for fixed rate mortgages is down 4.9 percent from one week ago, down 12.3 percent from four weeks earlier, and is 32.4 percent lower than a year ago. The index for adjustable-rate mortgages is up 4.0 percent week-over-week, up 14.6 percent from four weeks ago, and down 20.3 percent from a year ago. Adjustable-rate mortgages account for 7.6 percent of total applications in the August 18 week, up from 7.0 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. Kan said,"Some homebuyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period."
The contract rate for a 30-year fixed rate mortgage is 15 basis points higher to 7.31 percent in the August 18 week, up 44 basis points from four weeks ago, and up 166 basis points from a year earlier. As noted above, it is the highest since December 2000. The rate for a 5-year adjustable-rate mortgage is 6.50 percent, up 30 basis points from the prior week, up 49 basis points from four weeks earlier, and up 169 basis points from the year-ago week.
The purchase index is down 5.0 percent from the prior week, down 10.8 percent from four weeks earlier, and down 30.0 percent from a year ago. The refinance index is 2.8 percent lower week-over-week, down 10.7 percent from four weeks ago, and down 34.9 percent from the same time last year. Refinancing accounted for 29.5 percent of total applications in the week compared to 28.6 percent in the prior week.
The August 18 index for fixed rate mortgages is down 4.9 percent from one week ago, down 12.3 percent from four weeks earlier, and is 32.4 percent lower than a year ago. The index for adjustable-rate mortgages is up 4.0 percent week-over-week, up 14.6 percent from four weeks ago, and down 20.3 percent from a year ago. Adjustable-rate mortgages account for 7.6 percent of total applications in the August 18 week, up from 7.0 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. Kan said,"Some homebuyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period."
The contract rate for a 30-year fixed rate mortgage is 15 basis points higher to 7.31 percent in the August 18 week, up 44 basis points from four weeks ago, and up 166 basis points from a year earlier. As noted above, it is the highest since December 2000. The rate for a 5-year adjustable-rate mortgage is 6.50 percent, up 30 basis points from the prior week, up 49 basis points from four weeks earlier, and up 169 basis points from the year-ago week.
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.
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.
