The Mortgage Bankers Association’s or MBA weekly applications survey offers a comprehensive analysis of the mortgage industry. The index was created in 1990, and since then, it has been a leading indicator of housing and mortgage finance activity.

As per the data released by the MBA, applications for the seasonally adjusted index of mortgage application activity fell sharply, by 8.5% to 348.5 for the week ended February 2, 2014. Both new purchases and the refinancing index were down by 4% and 11%, respectively. The decline was in line with the fourth quarter softness witnessed in U.S. home prices. However, U.S. home prices were still positive. Analysts expect the holiday-shortened week to impact mortgage applications.

The MBA compiles 75% of the U.S. retail residential mortgage applications. The purchase applications index measures applications for mortgage lenders. This is a leading indicator for single-family home sales and housing construction. By tracking economic data such as the MBA purchase applications, investors can gauge demand for housing, which also has a ripple effect on other sectors—including the labor market, retail sector, and construction sector. Buying a home is a major indicator of consumer spending, which in turn indicates the direction of economic growth. A rise in the economy leads to a positive impact on stock prices, which rise as investor sentiment swells and leads bond prices to decline.

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