The MBA mortgage applications index is up 0.6 percent in the October 6 week. It is down 1.6 percent from four weeks ago, and down 16.3 percent from a year earlier. Mortgage rates are up for the fifth week in a row for fixed rate mortgages, but down somewhat for adjustable rate loans. MBA Deputy Chief Economist Joel Kan said,"While most mortgage rates increased last week, rates on ARMs declined, leading to an increase in ARM volume and an increase in overall applications. The level of ARM applications increased by 15 percent over the week, bringing the ARM share up to 9.2 percent of all applications, the highest share since November 2022."

The purchase index is up 0.7 percent from the prior week, down 4.3 percent from four weeks earlier, and down 19.4 percent from a year ago. The refinance index is 0.3 percent higher week-over-week, up 5.1 percent from four weeks ago, and down 8.8 percent from the same time last year. Refinancing accounted for 31.6 percent of total applications in the week compared to 31.7 percent in the prior week.

The October 6 index for fixed rate mortgages is down 0.7 percent from one week ago, down 3.4 percent from four weeks earlier, and is 14.0 percent lower than a year ago. The index for adjustable-rate mortgages is up 15.3 percent week-over-week, up 21.2 percent from four weeks ago, and down 34.2 percent from a year ago. Adjustable-rate mortgages account for 9.2 percent of total applications in the October 6 week, up from 8.0 percent in the prior week and the highest since November 2022. Buyers are opting for adjustable-rate mortgages while rates are at their highest since 2000.

The contract rate for a 30-year fixed rate mortgage is up 14 basis points to 7.67 percent in the October 6 week, up 40 basis points from four weeks ago, and up 86 basis points from a year earlier. The rate for a 5-year adjustable-rate mortgage is 6.33 percent, down 16 basis points from the prior week, down 26 basis points from four weeks earlier, and up 77 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.