DEFINITION of 'MBA Purchase Index'

The 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. Analysts consider the MBA Purchase Index to be a leading indicator of the housing market. 

BREAKING DOWN '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, “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. The weekly reports on the MBA Purchase Index describe the factors that are influencing mortgage application activity, such as interest rates, home prices, credit availability and the number of all-cash homebuyers. Because all-cash buyers make up a significant component of housing market activity, the MBA Purchase Index is said to understate housing market activity. 

RELATED TERMS
  1. MBA Refinance Index

    A weekly measurement put together by the Mortgage Bankers Association, ...
  2. Mortgage Bankers Association - ...

    The national association that represents the real estate finance ...
  3. Master Of Business Administration ...

    A graduate degree achieved at a university or college that provides ...
  4. Purchase Mortgage Market

    A mortgage market for home financing transactions. The primary ...
  5. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  6. Home Mortgage

    A loan given by a bank, mortgage company or other financial institution ...
Related Articles
  1. Personal Finance

    Learn To Use This Leading Indicator of Home Sales

    By following the trend shown in the MBA Purchase Index, investors can identify investment opportunities in businesses that are poised to benefit, and find cautionary signals around industries ...
  2. Personal Finance

    Rates Fall as Mortgage Applications Soar

    Despite last week's less than rosy jobs report, mortgage applications surged to 9.3% versus the previous week.
  3. Financial Advisor

    The Real Cost Of An MBA

    When adding up tuition, books, rent and foregone salary, an MBA can cost as much as a house. Is it worth it?
  4. Personal Finance

    The Real Cost Of An MBA

    Completing an MBA can cost as much as buying a house, so deciding whether to pursue one is a choice that requires much deliberation.
  5. Financial Advisor

    When Is an MBA Worth It?

    Earning an MBA can enhance one's career path, or help land a high-paying job. It also involves substantial expense and time. Here's when it makes sense.
  6. Financial Advisor

    Which is Right for You: MBA or Master's in Finance?

    While an MBA offers more flexibility in terms of curriculum and ability to take classes part time, a Master's of Finance is a good alternative for students seeking a finance-specific career.
  7. Investing

    Real Estate Indicators For Prospective Homebuyers

    If you want to buy a home but you’re holding out until market conditions show signs of improvement, housing indicators can help point the way.
  8. Personal Finance

    Should You Head Back To Business School?

    Find out if an MBA is necessary for you to reach your professional goals.
  9. Financial Advisor

    MBA or CFA: Which Is Better for a Career in Finance?

    Potential financial advisors, analysts or asset managers have many credentials and degrees from which to choose. Here's a look at the CFA vs. the MBA.
  10. Personal Finance

    Should You Get An MBA?

    If an MBA won't make it easier for you to reach your goals, it may be worth considering some alternatives.
RELATED FAQS
  1. Does a financial advisor need an MBA?

    Learn how a master's in business administration (MBA) is not needed for a licensed financial advisor as only specific coursework ... Read Answer >>
  2. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
  3. If I am looking to get an Investment Banking job. What education do employers prefer? ...

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The ... Read Answer >>
  4. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ... Read Answer >>
  5. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center