The MBA mortgage applications index is 2.8 percent higher in the December 1 week. It is 9.2 percent higher than four weeks ago and 11.3 percent lower than a year earlier. The purchase index is 0.3 percent lower in the current week and 12.0 percent higher than four weeks ago and 17.7 percent lower than a year earlier. The refinancing index is 13.9 percent higher and is 7.5 percent higher than four weeks ago and 9.5 percent higher than a year earlier. In the December 1 week, refinancing accounted for 34.7 percent of mortgage applications compared to 30.6 percent in the prior week.

MBA Deputy Chief Economist Joel Kan said,"Refinance applications saw the strongest week in two months and increased on a year-over-year basis for the second consecutive week for the first time since late 2021. The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast." He continued,"Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions."

The fixed-rate mortgage index is 3.6 percent higher in the December 1 week. It is 12.1 percent higher than four weeks ago and 11.1 percent lower than this week last year. The adjustable-rate mortgage index is 6.2 percent lower and is 18.1 percent lower than four weeks ago and 13.8 percent lower than a year ago. In the December 1 week, adjustable-rate mortgages accounted for 7.4 percent of mortgage applications compared to 8.1 percent in the prior week.

The contract rate for a 30-year fixed-rate mortgage is 7.17 percent in the current week. This is 20 basis points lower than the prior week, 44 basis points lower than four weeks ago, and 76 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.58 percent in the week. This is 1 basis point lower than the prior week, 18 basis points lower than four weeks ago, and 99 basis points higher than a year earlier. Consumers continue to prefer a fixed rate mortgage as a way to lock in monthly housing costs without risk of a higher rate at the end of an adjustment period. Those currently taking out a mortgage fixed or adjustable rate are likely to keep a close eye on mortgage rates in hope of a refinancing opportunity in the future.

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.