The MBA mortgage applications index is 2.3 percent higher in the Feb. 7 week. It is 2.5 percent higher than four weeks ago and 13.2 percent higher than a year earlier.

The purchase index is 2.3 percent lower in the current week and 5.5 percent lower than four weeks ago and 3.0 percent higher than a year earlier.

The refinancing index is 9.6 percent higher and is 11.3 percent higher than four weeks ago and 32.9 percent higher than a year earlier. In the Feb. 7 week, refinancing accounted for 40.2 percent of mortgage applications compared to 39.0 percent in the prior week. Declining mortgage rates in the week fueled the rise in the share of refinancings, MBA said.

The 30-year contract mortgage rate is down 2 bps at 6.95 percent in the latest week from a week ago. It is down 14 basis points from four weeks ago and up 8 basis points from a year ago.

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.