The MBA mortgage applications index is 3.7 percent higher in the February 2 week. It is 10.2 percent higher than four weeks ago and 12.9 percent lower than a year earlier. The purchase index is 0.6 percent lower in the current week and 3.3 percent higher than four weeks ago and 18.6 percent lower than a year earlier. The refinancing index is 12.3 percent higher and is 17.6 percent higher than four weeks ago and 0.7 percent higher than a year earlier. In the February 2 week, refinancing accounted for 35.4 percent of mortgage applications compared to 34.2 percent in the prior week. The increase in the refinancing index is only marginal despite the rise and reflects very low levels of activity.

MBA Deputy Chief Economist Joel Kan said,"Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed mortgage rate was 6.8 percent, a slight increase from last week." He continued,"Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. However, purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply."

The fixed-rate mortgage index is 3.9 percent higher in the February 2 week. It is 9.0 percent higher than four weeks ago and 12.7 percent lower than this week last year. The adjustable-rate mortgage index is 0.9 percent higher and is 30.8 percent higher than four weeks ago and 15.5 percent lower than a year ago.

The contract rate for a 30-year fixed-rate mortgage is 6.80 percent in the current week. This is 2 basis points higher than the prior week, 1 basis points lower than four weeks ago, and 62 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.14 percent in the week. This is 9 basis points lower than the prior week, 3 basis points lower than four weeks ago, and 58 basis points higher than a year earlier. In the February 2 week, adjustable-rate mortgages accounted for 6.4 percent of mortgage applications compared to 6.6 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.