Washington, DC – October 27, 2011 – (RealEstateRama) — The Federal Housing Finance Agency today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 4.38 percent based on loans closed in September. This is a decrease of 0.18 percent from the previous month. This Contract Rate series can be found at http://www.fhfa.gov/Default.aspx?Page=251.
The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 7 basis points to 4.56 percent in September. These rates are calculated from the FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note). These results reflect loans closed during the September 26-30 period.
Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-August.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.36 percent in September, down 16 basis points from 4.52 percent in August. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.49 percent in September, down 16 basis points from 4.65 percent in August.
This report contains no data on adjustable-rate mortgages due to insufficient sample size. Initial fees and charges were 0.94 percent of the loan balance in September, up 0.04 percent from 0.90 in August. Twenty-nine percent of the purchase-money mortgage loans originated in September were “no-point” mortgages, down one percent from the share in August. The average term was 29.0 years in September, up 1.4 years from 27.6 years in August. The average loan-to-price ratio in September was 78.3 percent, up 1.1 percent from 77.2 percent in August. The average loan amount was $220,700 in September, up $6,400 from $214,300 in August.
Recorded information on this index is available by calling (202) 408-2940. For technical questions on this index, please call David Roderer at (202) 414-3106. The October index value will be announced on November 22, 2011.
Technical note: The data are based on a small monthly survey of mortgage lenders which may not be representative. Survey respondents are asked to report the terms and conditions on all conventional, single-family, fully amortized, purchase-money loans closed during the last five working days of the month. The sample is not a statistical sample but is rather a convenience sample. The data exclude FHA-insured and VA-guaranteed mortgages, refinancing loans, and balloon loans. This month’s data are based on 4,131 reported loans from 32 lenders, which may include savings associations, mortgage companies, commercial banks, and mutual savings banks.
The effective interest rate includes the amortization of initial fees and charges over a 10-year period, which is the historical assumption of the average life of a mortgage loan. The data are weighted to reflect the shares of mortgage lending by lender size and lender type as reported in the latest release of the Federal Reserve Board’s Home Mortgage Disclosure Act data.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than 5.7 trillion in funding for the U.S. mortgage markets and financial institutions.
Corinne Russell (202) 414-6921
Stefanie Johnson (202) 414-6376