The December 5 week lands at the start of the holiday season when new home purchases trend lower until after the New Year. However, refinancing activity does not involve disrupting households the same way buying a home and moving does. While some new buyers may find the right home at the right price with the right mortgage, buyer traffic will be generally slow. Refinancing activity is sensitive to interest rates and now may still be seen as a good time to capture a fixed rate mortgage at a lower rate.

The MBA mortgage applications index is 4.8 percent higher in the December 5 week. It is 1.9 percent lower than four weeks ago and 45.4 percent higher than a year earlier. The purchase index is 2.4 percent lower in the current week and 5.2 percent higher than four weeks ago and 17.2 percent higher than a year earlier. The refinancing index is 14.3 percent higher and is 4.6 percent lower than four weeks ago and 87.8 percent higher than a year earlier. In the December 5 week, refinancing accounted for 58.2 percent of mortgage applications compared to 53.0 percent in the prior week.

The fixed-rate mortgage index is 5.9 percent higher in the December 5 week. It is 1.1 percent lower than four weeks ago and 42.9 percent higher than this week last year. The adjustable-rate mortgage index is 7.9 percent lower and is 11.3 percent lower than four weeks ago and 90.7 percent higher than a year ago.

The contract rate for a 30-year fixed-rate mortgage is 6.33 percent in the current week. This is 1 basis point higher than the prior week, 1 basis point lower than four weeks ago, and 34 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 5.51 percent in the week. This is 11 basis points higher than the prior week, 1 basis points higher than four weeks ago, and 30 basis points lower than a year earlier. In the December 5 week, adjustable-rate mortgages accounted for 7.0 percent of mortgage applications compared to 8.0 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.