| Actual | Previous | |
|---|---|---|
| Composite Index - W/W | -1.3% | 5.4% |
| Purchase Index - W/W | -1.5% | 2.3% |
| Refinance Index - W/W | -0.9% | 13.2% |
Highlights
The MBA mortgage applications composite index is down 1.3 percent in the September 22 week. It is down 25.6 percent from a year earlier. The purchase index is down 1.5 percent from the prior week and down 27.3 percent from a year ago. The refinance index is 0.9 percent lower week-over-week, and down 21.4 percent from the same time last year. Refinancing accounted for 31.9 percent of total applications in the week compared to 31.6 percent in the prior week.
Rising mortgage rates hit mortgage activity in the latest week, MBA said. The 30-year mortgage contract rate surged 10 basis points from the prior week to 7.41 percent, its highest since December 2000. The 30-year rate Is also up 10 basis points from four weeks ago, and up 89 basis points from a year ago. The rate for a 5-year adjustable-rate mortgage is 6.47 percent, up 5 basis points from the prior week, down 1 basis point from four weeks earlier, and up 117 basis points from the year-ago week.
Joel Kan, MBA's deputy chief economist, said,"Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year's pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications, as many homeowners have little incentive to refinance."
The September 22 index for fixed rate mortgages is down 1.6 percent from one week ago, and is 23.2 percent lower than a year ago. The index for adjustable-rate mortgages is up 2.3 percent week-over-week, and down 46.3 percent from a year ago. Adjustable-rate mortgages account for 7.5 percent of total applications in the September 22 week, up from 7.2 percent in the prior week. Buyers are opting for fixed rate mortgages despite the highest rates in more than 22 years.
Rising mortgage rates hit mortgage activity in the latest week, MBA said. The 30-year mortgage contract rate surged 10 basis points from the prior week to 7.41 percent, its highest since December 2000. The 30-year rate Is also up 10 basis points from four weeks ago, and up 89 basis points from a year ago. The rate for a 5-year adjustable-rate mortgage is 6.47 percent, up 5 basis points from the prior week, down 1 basis point from four weeks earlier, and up 117 basis points from the year-ago week.
Joel Kan, MBA's deputy chief economist, said,"Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year's pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications, as many homeowners have little incentive to refinance."
The September 22 index for fixed rate mortgages is down 1.6 percent from one week ago, and is 23.2 percent lower than a year ago. The index for adjustable-rate mortgages is up 2.3 percent week-over-week, and down 46.3 percent from a year ago. Adjustable-rate mortgages account for 7.5 percent of total applications in the September 22 week, up from 7.2 percent in the prior week. Buyers are opting for fixed rate mortgages despite the highest rates in more than 22 years.
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.
