| Actual | Previous | |
|---|---|---|
| Composite Index - W/W | 15.6% | -5.2% |
| Purchase Index - W/W | 8.6% | -4.4% |
| Refinance Index - W/W | 28.4% | -6.8% |
Highlights
The MBA mortgage applications index is 15.6 percent higher in the June 7 week. It is 5.2 percent higher than four weeks ago and 0.1 percent lower than a year earlier. The purchase index is 8.6 percent higher in the current week and 1.4 percent higher than four weeks ago and 11.9 percent lower than a year earlier. The refinancing index is 28.4 percent higher and is 11.0 percent higher than four weeks ago and 27.8 percent higher than a year earlier. In the June 7 week, refinancing accounted for 35.2 percent of mortgage applications compared to 31.1 percent in the prior week. The jump in purchase applications reflects an increase after the holiday week when homebuyers were not as active, and that mortgage interest rates were on the decline until the May employment numbers caused them to rise again. Homebuyers and refinancers are quick to take advantage of a dip in mortgage rates, and just as quick to step back when rates rise.
The fixed-rate mortgage index is 16.1 percent higher in the June 7 week. It is 6.0 percent higher than four weeks ago and the same as this week last year. The adjustable-rate mortgage index is 7.0 percent higher and is 5.6 percent lower than four weeks ago and 3.4 percent lower than a year ago.
MBA Chief Economist Mike Fratantoni said,"Mortgage rates were trending lower over the course of last week until a stronger than anticipated employment report resulted in a bounce back, with the weekly average for the 30-year fixed mortgage rate decreasing to 7.02 percent." He continued,"On a seasonally adjusted basis and compared to the holiday-adjusted level from the prior week, purchase activity also increased. Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market."
The contract rate for a 30-year fixed-rate mortgage is 7.02 percent in the current week. This is 5 basis points lower than the prior week, 6 basis points lower than four weeks ago, and 25 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.45 percent in the week. This is 8 basis points higher than the prior week, 11 basis points lower than four weeks ago, and 55 basis points higher than a year earlier. In the June 7 week, adjustable-rate mortgages accounted for 6.3 percent of mortgage applications compared to 6.7 percent in the prior week.
The fixed-rate mortgage index is 16.1 percent higher in the June 7 week. It is 6.0 percent higher than four weeks ago and the same as this week last year. The adjustable-rate mortgage index is 7.0 percent higher and is 5.6 percent lower than four weeks ago and 3.4 percent lower than a year ago.
MBA Chief Economist Mike Fratantoni said,"Mortgage rates were trending lower over the course of last week until a stronger than anticipated employment report resulted in a bounce back, with the weekly average for the 30-year fixed mortgage rate decreasing to 7.02 percent." He continued,"On a seasonally adjusted basis and compared to the holiday-adjusted level from the prior week, purchase activity also increased. Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market."
The contract rate for a 30-year fixed-rate mortgage is 7.02 percent in the current week. This is 5 basis points lower than the prior week, 6 basis points lower than four weeks ago, and 25 basis points higher than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.45 percent in the week. This is 8 basis points higher than the prior week, 11 basis points lower than four weeks ago, and 55 basis points higher than a year earlier. In the June 7 week, adjustable-rate mortgages accounted for 6.3 percent of mortgage applications compared to 6.7 percent in the prior week.
Definition
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.
Description
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.
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.
