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Mortgage applications forecast homebuilder and REIT activity

Brent Nyitray, CFA

Weekly mortgage applications review, August 12–16 (Part 1 of 5)

Every week, the Mortgage Bankers Association (MBA) puts out an index of mortgage application activity

Mortgage applications are relevant to a number of industries—from banks to non-banks, to mortgage REITs to homebuilders. This series will break down the different indices and help you learn what insight you can glean from them. If you’re a bank, you’re looking at these indices and trying to determine whether you’re competitive in all the segments you want to be competitive in. If you’re a non-bank, you might be looking to see if you’re gaining share or losing share. If you’re a mortgage REIT, you’re focusing on the refinance index and what it might mean for prepayments going forward. And if you’re a homebuilder, you’re watching the purchase index as a way to gauge future demand.



This weekly piece is useful to help investors forecast activity for the homebuilders, like Lennar (LEN), KB Home (KBH), and Standard Pacific (SPF), as well as assess prepayment risk for mortgage REITs, like American Capital Agency (AGNC) and Annaly Capital (NLY).

This series will look at the three main MBA indices. We’ll start with the basic MBA Mortgage Applications Index.

Continue to Part 2

  • Part 2 - Why a bad week for bonds means a bad week for REITs
  • Part 3 - Must-know: MBA Purchase Index increases despite a jump in rates
  • Part 4 - Why the MBA Refinance Index hit its lowest levels since 2011