Bank of America Merrill Lynch (BAC) analysts just emailed a research note reminding clients they feel the Fed needs to continue to back the mortgage market if the so-called housing recovery is to remain intact.

Justin Borst and Chris Flanagan say the fundamental numbers behind household formation — mortgage purchase application activity — remains critically weak.

The housing recovery may not continue, they indicate, if the Federal Reserve continues to pull back on its purchase of mortgage-backed securities and decides to raise rates sooner-than-later.

"While the Fed’s seeming communication stumble and the bear flattening dominated this week’s news, we view the ongoing weakness in mortgage purchase application activity as the main story," they write.

"Until proven otherwise, these numbers are awful, and create a need for continued Fed accommodation and a positive technical backdrop for securitized products, especially credit," they add.

The latest mortgage applications came in weak. The analysts don't see those numbers improving should the Fed begin to raise rates. Indeed, the opposite is more likely to happen.

"We believe the demand side for mortgage credit remains intrinsically weak and find it hard to believe that it will strengthen into higher rates," they write.