A dip in mortgage rates brought applications for mortgage back into the market in the March 8 week. The MBA mortgage applications index is 7.1 percent higher in the March 8 week. It is 0.8 percent lower than four weeks ago and 6.1 percent lower than a year earlier. The purchase index is 4.7 percent higher in the current week and 0.6 percent lower than four weeks ago and 10.8 percent lower than a year earlier. The refinancing index is 12.2 percent higher and is 0.4 percent lower than four weeks ago and 4.7 percent higher than a year earlier. In the March 8 week, refinancing accounted for 31.6 percent of mortgage applications compared to 30.2 percent in the prior week.

MBA Chief Economist Mike Fratantoni said,"Mortgage rates dropped below 7 percent last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months." He continued,"Purchase application volume increased for the week but remains about 11 percent below last year's level. By contrast, refinance volume picked up by 12 percent, with a larger 24 percent increase in the government refinance index. While these percentage increases are large, the level of refinance activity remains quite low, and we expect that most of this activity reflects borrowers who took out a loan at or near the peak of rates in the past two years."

The fixed-rate mortgage index is 7.1 percent higher in the March 8 week. It is 1.5 percent lower than four weeks ago and 5.2 percent lower than this week last year. The adjustable-rate mortgage index is 6.0 percent higher and is 7.9 percent higher than four weeks ago and 15.3 percent lower than a year ago.

The contract rate for a 30-year fixed-rate mortgage is 6.84 percent in the current week. This is 18 basis points lower than the prior week, 3 basis points lower than four weeks ago, and 13 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.38 percent in the week. This is unchanged from the prior week, 8 basis points higher than four weeks ago, and 69 basis points higher than a year earlier. In the March 8 week, adjustable-rate mortgages accounted for 7.7 percent of mortgage applications, the same as in the prior 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.