RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The MBA Mortgage Purchase Index is a weekly measure that tracks the volume of nationwide mortgage loan applications activity. It is based on a sample of approximately 75% of U.S. mortgage activity, including new loan origination and refinancing for single family homes. This weekly survey is a well established measure of U.S. residential mortgage applications, and has been conducted since 1990. It serves as a forecast of future housing construction activity. It is released by the Mortgage Bankers Association (MBA) every Wednesday at 7:00 AM EST. MBA is the national association representing the real estate and finance industry. It is important to note that the MBA Mortgage Purchase Index does not measure the number of homes purchased or built. Neither does it track the number of mortgage loans closed, since there are no guarantees a definite amount of applications will be approved. What it DOES do, is provide insights for investors.

The MBA Mortgage Purchase Index is a leading indicator of home sales. It forecasts home buying four to six weeks into the future. When consumers are purchasing homes, they are usually buying just about everything else. When they aren’t purchasing homes, the economy is usually in trouble. Remember the Great Recession of 2007-2009?

While a single reading of the Mortgage Purchase Index provides only a snapshot, the four week moving average and other long term data points provide clear indicators of trends in the housing market. For investors these trends provide insight into a variety of investment opportunities in numerous categories, such as: home improvement stocks, consumer goods companies, mortgage servicing companies, REITS, insurance companies, and banking stocks. Are you watching these numbers every week?

Susan Green