| Actual | Previous | |
|---|---|---|
| Composite Index - W/W | 16.8% | 6.9% |
| Purchase Index - W/W | 2.8% | 0.8% |
| Refinance Index - W/W | 34.5% | 15.9% |
Highlights
The MBA mortgage applications index is 16.8 percent higher in the August 9 week. It is 17.4 percent higher than four weeks ago and 30.2 percent higher than a year earlier. The purchase index is 2.8 percent higher in the current week and 1.9 percent lower than four weeks ago and 7.9 percent lower than a year earlier. The refinancing index is 34.5 percent higher and is 45.1 percent higher than four weeks ago and 117.8 percent higher than a year earlier. In the August 9 week, refinancing accounted for 48.6 percent of mortgage applications compared to 41.7 percent in the prior week. Current mortgage rates are driving refinancing of higher rate mortgages taken out late in the summer of 2023 and into November of that year.
MBA Deputy Chief Economist Joel Kan said,"Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week's rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance." He continued,"Overall applications increased almost 17 percent to the highest level since January 2023, driven by a 35 percent increase in refinance applications. The refinance index also saw its strongest week since May 2022 and was 117 percent higher than a year ago, driven by gains in conventional, FHA, and VA applications. Additionally, purchase applications increased by 3 percent, with small gains seen across the various loan types, indicating that prospective homebuyers are slowly reentering the market."
The fixed-rate mortgage index is 15.6 percent higher in the August 9 week. It is 15.4 percent higher than four weeks ago and 29.7 percent higher than this week last year. The adjustable-rate mortgage index is 36.0 percent higher and is 48.9 percent higher than four weeks ago and 36.8 percent higher than a year ago.
The contract rate for a 30-year fixed-rate mortgage is 6.54 percent in the current week. This is 1 basis point lower than the prior week, 33 basis points lower than four weeks ago, and 62 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.04 percent in the week. This is 13 basis points higher than the prior week, 29 basis points lower than four weeks ago, and 16 basis points lower than a year earlier. In the August 9 week, adjustable-rate mortgages accounted for 7.3 percent of mortgage applications compared to 6.3 percent in the prior week. Some homebuyers and refinancers may be opting for adjustable rate mortgages as the most affordable choice right now and hoping to refinance to a lower fixed rate later.
MBA Deputy Chief Economist Joel Kan said,"Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week's rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance." He continued,"Overall applications increased almost 17 percent to the highest level since January 2023, driven by a 35 percent increase in refinance applications. The refinance index also saw its strongest week since May 2022 and was 117 percent higher than a year ago, driven by gains in conventional, FHA, and VA applications. Additionally, purchase applications increased by 3 percent, with small gains seen across the various loan types, indicating that prospective homebuyers are slowly reentering the market."
The fixed-rate mortgage index is 15.6 percent higher in the August 9 week. It is 15.4 percent higher than four weeks ago and 29.7 percent higher than this week last year. The adjustable-rate mortgage index is 36.0 percent higher and is 48.9 percent higher than four weeks ago and 36.8 percent higher than a year ago.
The contract rate for a 30-year fixed-rate mortgage is 6.54 percent in the current week. This is 1 basis point lower than the prior week, 33 basis points lower than four weeks ago, and 62 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 6.04 percent in the week. This is 13 basis points higher than the prior week, 29 basis points lower than four weeks ago, and 16 basis points lower than a year earlier. In the August 9 week, adjustable-rate mortgages accounted for 7.3 percent of mortgage applications compared to 6.3 percent in the prior week. Some homebuyers and refinancers may be opting for adjustable rate mortgages as the most affordable choice right now and hoping to refinance to a lower fixed rate later.
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.
