The MBA mortgage applications index is 10.7 percent lower in the December 29 week. It is 4.2 percent lower than four weeks ago and 6.0 percent lower than a year earlier. The purchase index is 7.6 percent lower in the current week and 2.6 percent lower than four weeks ago and 12.2 percent lower than a year earlier. The refinancing index is 18.1 percent lower and is 4.0 percent lower than four weeks ago and 15.2 percent higher than a year earlier. In the December 29 week, refinancing accounted for 36.3 percent of mortgage applications compared to 39.4 percent in the prior week. Interest in the housing market tends to be quite slow at year end, but recent declines in mortgage rates should spark some activity in the coming weeks.

MBA Deputy Chief Economist Joel Kan said,"Markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid-2023." He added,"The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response".

The fixed-rate mortgage index is 10.4 percent lower in the December 29 week. It is 2.8 percent lower than four weeks ago and 4.6 percent lower than this week last year. The adjustable-rate mortgage index is 14.6 percent lower and is 21.6 percent lower than four weeks ago and 22.3 percent lower than a year ago. With the decline in rates, homebuyers' preference for a fixed rate mortgage is again more dominant to lock in monthly housing costs without the risk of a rate reset in the future.

The contract rate for a 30-year fixed-rate mortgage is 6.76 percent in the current week. This is 5 basis points higher than the prior week, 41 basis points lower than four weeks ago, and 18 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 5.71 percent in the week. This is 55 basis points lower than the prior week, 87 basis points lower than four weeks ago, and 10 basis points higher than a year earlier. In the December 29 week, adjustable-rate mortgages accounted for 6.0 percent of mortgage applications compared to 6.3 percent in the prior 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.