The MBA mortgage applications index is down 2.1 percent in the October 27 week. It is down 9.2 percent from four weeks ago, and down 19.1 percent from a year earlier. Mortgage rates are down slightly after seven weeks in a row for rising rates for fixed rate mortgages. MBA Deputy Chief Economist Joel Kan said,"Mortgage applications declined for the third straight week as mortgage rates remained elevated, with all rates around 30 basis points higher than they were a month ago. The 30-year fixed rate dipped slightly to 7.86 percent but remained close to 23-year highs and has been above the 7 percent level since early August 2023."

The purchase index is down 1.4 percent from the prior week, down 8.3 percent from four weeks earlier, and down 22.0 percent from a year ago. The refinance index is 3.5 percent lower week-over-week, down 11.2 percent from four weeks ago, and down 11.6 percent from the same time last year. Refinancing accounted for 31.2 percent of total applications in the week compared to 31.4 percent in the prior week. Although refinancing is up a bit, it is still at very low levels.

The October 27 index for fixed rate mortgages is down 3.3 percent from one week ago, down 11.9 percent from four weeks earlier, and is 18.1 percent lower than a year ago. The index for adjustable-rate mortgages is up 9.8 percent week-over-week, up 21.0 percent from four weeks ago, and down 27.1 percent from a year ago. Adjustable-rate mortgages account for 10.7 percent of total applications in the October 27 week, up 9.5 percent in the prior week. Buyers are opting for adjustable-rate mortgages while rates are at their highest since 2000, although fewer mortgage applications are taking place overall. Kan said higher rates continue"to impact affordability and purchasing power."

The contract rate for a 30-year fixed rate mortgage is down 4 basis points to 7.86 percent in the October 27 week, up 33 basis points from four weeks ago, and up 80 basis points from a year earlier. The rate for a 5-year adjustable rate mortgage is 6.77 percent, down 22 basis points from the prior week, up 28 basis points from four weeks earlier, and up 98 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.