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16th April 2016, 10:13 AM
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Join Date: May 2012
Re: MBA Mortgage Index Definition

Hey as per my ideaThe Mortgage Bankers Association’s weekly measurement
of nationwide home loan applications based on a sample of about 75% of
U.S. mortgage activity. Contrary to its name, the MBA Purchase Index does
not measure the number of homes purchased or mortgage loans closed.

MBA Purchase Index


The MBA Purchase Index is a leading indicator of home sales by four to six
weeks, meaning that it is a predictor of housing activity, though predictions
may not prove accurate.

Housing economists and homebuilders use the index to forecast new and
existing home sales. Lenders use it to gauge whether they are getting
enough applications given overall application activity.

The index is also considered a leading indicator of mortgage prepayment,
which is important for investors in mortgage-backed securities, including
REITs.

The MBA Purchase Index is reported as a percentage increase or decrease
from the previous week. For example, a news report might read,

Index rate


The MBA Purchase Index rose 2% for the week ending June 21.” The index changes seasonally since real estate activity is seasonal.

Most housing market activity occurs from spring through fall, with a peak in
the summer.

The relationship between the activity levels shown by the index and expected
activity levels for the time of year tells analysts about the strength or
weakness of the housing market


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