A rise in mortgage rates related to uncertainty about the timing and size of possible rate cuts by the Federal Reserve sent mortgage rates a bit higher and mortgage applications lower in the March 15 week. The MBA mortgage applications index is 1.6 percent lower in the March 15 week. It is 9.1 percent higher than four weeks ago and 10.3 percent lower than a year earlier. The purchase index is 1.2 percent lower in the current week and 9.3 percent higher than four weeks ago and 13.8 percent lower than a year earlier. The refinancing index is 2.5 percent lower and is 9.7 percent higher than four weeks ago and 2.7 percent lower than a year earlier. In the March 15 week, refinancing accounted for 31.2 percent of mortgage applications compared to 31.6 percent in the prior week.

MBA Deputy Chief Economist Joel Kan said,"Mortgage rates increased last week as incoming data showed inflation was still hotter than expected, which stoked concerns about the timing and extent to which the Fed might be able to reduce the fed funds rates this year. After three weeks of declines, the 30-year fixed mortgage rate increased to 6.97 percent." He continued,"Mortgage applications continued to show sensitivity to rate movements, and both purchase and refinance activity decreased over the week. With housing supply low and prices high, the average loan size for purchase applications increased to the highest level since May 2022."

The contract rate for a 30-year fixed-rate mortgage is 6.97 percent in the current week. This is 13 basis points higher than the prior week, 9 basis points lower than four weeks ago, and 49 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.33 percent in the week. This is 5 basis points lower than the prior week, 4 basis points lower than four weeks ago, and 75 basis points higher than a year earlier. In the March 15 week, adjustable-rate mortgages accounted for 7.2 percent of mortgage applications compared to 7.7 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.