| Actual | Previous | |
|---|---|---|
| Composite Index - W/W | 6.9% | -3.9% |
| Purchase Index - W/W | 0.8% | -1.5% |
| Refinance Index - W/W | 15.9% | -7.2% |
Highlights
The MBA mortgage applications index is 6.9 percent higher in the August 2 week. It is 4.4 percent higher than four weeks ago and 10.6 percent higher than a year earlier. The purchase index is 0.8 percent higher in the current week and 7.2 percent lower than four weeks ago and 10.7 percent lower than a year earlier. The refinancing index is 15.9 percent higher and is 24.3 percent higher than four weeks ago and 59.0 percent higher than a year earlier. In the August 2 week, refinancing accounted for 41.7 percent of mortgage applications compared to 38.2 percent in the prior week.
While applications for new mortgages reflect potential homebuyers who can wait, at least some of those who can't may be opting for ARMs in expectation of refinancing to a fixed rate later. In addition to a small wave of refinancing activity for fixed rate mortgages taken out when rates were above 7 percent, some current holders of higher rate ARMs may see an opportunity to refinance to a fixed rate and save on monthly housing costs.
MBA Deputy Chief Economist Joel Kan said,"Mortgage rates decreased across the board last week and mortgage application volume reached its highest level since January of this year. The 30-year fixed rate fell to 6.55 percent, reaching its lowest level since May 2023." He said,"Despite the downward movement in rates, purchase activity only saw small gains, with an increase in conventional purchase applications offset by decreases in government purchase applications. For-sale inventory is beginning to increase gradually in some parts of the country and homebuyers might be biding their time to enter the market given the prospect of lower rates." He also noted,"As a result of lower rates, refinance applications increased across all loan types."
The contract rate for a 30-year fixed-rate mortgage is 6.55 percent in the current week. This is 27 basis points lower than the prior week, 45 basis points lower than four weeks ago, and 54 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 5.91 percent in the week. This is 31 basis points lower than the prior week, 31 basis points lower than four weeks ago, and 45 basis points lower than a year earlier. In the August 2 week, adjustable-rate mortgages accounted for 6.3 percent of mortgage applications compared to 5.7 percent in the prior week.
The fixed-rate mortgage index is 6.2 percent higher in the August 2 week. It is 4.2 percent higher than four weeks ago and 11.3 percent higher than this week last year. The adjustable-rate mortgage index is 18.5 percent higher and is 6.1 percent higher than four weeks ago and 0.8 percent higher than a year ago.
While applications for new mortgages reflect potential homebuyers who can wait, at least some of those who can't may be opting for ARMs in expectation of refinancing to a fixed rate later. In addition to a small wave of refinancing activity for fixed rate mortgages taken out when rates were above 7 percent, some current holders of higher rate ARMs may see an opportunity to refinance to a fixed rate and save on monthly housing costs.
MBA Deputy Chief Economist Joel Kan said,"Mortgage rates decreased across the board last week and mortgage application volume reached its highest level since January of this year. The 30-year fixed rate fell to 6.55 percent, reaching its lowest level since May 2023." He said,"Despite the downward movement in rates, purchase activity only saw small gains, with an increase in conventional purchase applications offset by decreases in government purchase applications. For-sale inventory is beginning to increase gradually in some parts of the country and homebuyers might be biding their time to enter the market given the prospect of lower rates." He also noted,"As a result of lower rates, refinance applications increased across all loan types."
The contract rate for a 30-year fixed-rate mortgage is 6.55 percent in the current week. This is 27 basis points lower than the prior week, 45 basis points lower than four weeks ago, and 54 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 5.91 percent in the week. This is 31 basis points lower than the prior week, 31 basis points lower than four weeks ago, and 45 basis points lower than a year earlier. In the August 2 week, adjustable-rate mortgages accounted for 6.3 percent of mortgage applications compared to 5.7 percent in the prior week.
The fixed-rate mortgage index is 6.2 percent higher in the August 2 week. It is 4.2 percent higher than four weeks ago and 11.3 percent higher than this week last year. The adjustable-rate mortgage index is 18.5 percent higher and is 6.1 percent higher than four weeks ago and 0.8 percent higher than a year ago.
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.
