Washington, DC – November 22, 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 4.19 percent based on loans closed in October. This is a decrease of 0.19 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 20 basis points to 4.36 percent in October. 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 October 25-31 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-September.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.17 percent in October, down 19 basis points from 4.36 percent in September. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.29 percent in October, down 20 basis points from 4.49 percent in September.
This report contains no data on adjustable-rate mortgages due to insufficient sample size. Initial fees and charges were 0.83 percent of the loan balance in October, down 0.11 percent from 0.94 in September. Twenty-eight percent of the purchase-money mortgage loans originated in October were “no-point” mortgages, down one percent from the share in September. The average term was 28.7 years in October, down 0.3 years from 29.0 years in September. The average loan-to-price ratio in October was 78.4 percent, up 0.1 percent from 78.3 percent in September. The average loan amount was $218,500 in October, down $2,200 from $220,700 in September.
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 November index value will be announced on December 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 3,716 reported loans from 29 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