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US: MBA Mortgage Applications
| Actual | Previous | |
| Composite Index - W/W | -10.9% | 3.2% |
| Purchase Index - W/W | 0.9% | 7.8% |
| Refinance Index - W/W | -18.5% | 0.5% |
Highlights
In the March 13 week, mortgage applications felt the bite of a rise in rates. Applications for new mortgages barely increased at the start of the spring homebuying season and refinancing activity is choked off. Homebuyers and refinancers remain sensitive to movements in interest rates. Some will be priced out of the market at a higher interest rate and those who had yet to refinance have missed the opportunity for a lower rate at least for the moment. If the threat of rising inflation from oil prices proves to be longer lasting than a few weeks, it could be a while before rates look as attractive as they have in recent months.
The MBA mortgage applications index is 10.9 percent lower in the March 13 week. It is 2.4 percent higher than four weeks ago and 37.5 percent higher than a year earlier. The purchase index is 0.9 percent higher in the current week and 10.1 percent higher than four weeks ago and 11.8 percent higher than a year earlier. The refinancing index is 18.5 percent lower and is 2.5 percent lower than four weeks ago and 68.8 percent higher than a year earlier. In the March 13 week, refinancing accounted for 52.3 percent of mortgage applications compared to 57.8 percent in the prior week.
The fixed-rate mortgage index is 10.1 percent lower in the March 13 week. It is 2.6 percent higher than four weeks ago and 35.5 percent higher than this week last year. The adjustable-rate mortgage index is 19.4 percent lower and is 0.2 percent higher than four weeks ago and 64.8 percent higher than a year ago.
The contract rate for a 30-year fixed-rate mortgage is 6.30 percent in the current week. This is 11 basis points higher than the prior week, 13 basis points higher than four weeks ago, and 42 basis points lower than a year earlier. The contract rate for a 5-year adjustable-rate mortgage is 5.65 percent in the week. This is 39 basis points higher than the prior week, 36 basis points higher than four weeks ago, and 19 basis points lower than a year earlier. In the March 13 week, adjustable-rate mortgages accounted for 8.0 percent of mortgage applications compared to 8.9 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.