The MBA mortgage applications index is down 1.0 percent in the October 20 week. It is down 12.9 percent from four weeks ago, and down 17.9 percent from a year earlier. Mortgage rates are up for the seventh week in a row for fixed rate mortgages. MBA Deputy Chief Economist Joel Kan said,""Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995. These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity."

The purchase index is down 2.2 percent from the prior week, down 12.3 percent from four weeks earlier, and down 21.5 percent from a year ago. The refinance index is 1.8 percent higher week-over-week, down 14.0 percent from four weeks ago, and down 8.3 percent from the same time last year. Refinancing accounted for 31.5 percent of total applications in the week compared to 30.5 percent in the prior week. Although refinancing is up a bit, it is still at very low levels.

The October 20 index for fixed rate mortgages is down 1.3 percent from one week ago, down 14.8 percent from four weeks earlier, and is 14.9 percent lower than a year ago. The index for adjustable-rate mortgages is up 1.9 percent week-over-week, up 11.0 percent from four weeks ago, and down 38.3 percent from a year ago. Adjustable-rate mortgages account for 9.5 percent of total applications in the October 20 week, up slightly from 9.3 percent in the prior week and still the highest since November 2022. Buyers are opting for adjustable-rate mortgages while rates are at their highest since 2000, although fewer mortgage applications are taking place overall.

The contract rate for a 30-year fixed rate mortgage is up 20 basis points to 7.79 percent in the October 20 week, up 49 basis points from four weeks ago, and up 74 basis points from a year earlier. The rate for a 5-year adjustable-rate mortgage is 6.99 percent, up 47 basis points from the prior week, up 52 basis points from four weeks earlier, and up 113 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.