Washington, DC – February 28, 2012 – (RealEstateRama) — The Federal Housing Finance Agency (FHFA) 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 4.25 percent based on loans closed in January. This is an increase of 0.10 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 increased 1 basis point to 4.33 percent in January. 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 January 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-December.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.19 percent in January, up 6 basis points from 4.13 percent in December. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.31 percent in January, up 7 basis points from 4.24 percent in December.
This report contains no data on adjustable-rate mortgages due to insufficient sample size. Initial fees and charges were 0.82 percent of the loan balance in January, down 0.01 percent from 0.83 in December. Thirty-eight percent of the purchase-money mortgage loans originated in January were “no-point” mortgages, up six percent from the share in December. The average term was 28.3 years in January, down 0.5 years from 28.8 years in December. The average loan-to-price ratio in January was 75.5 percent, down 3.2 percent from 78.7 percent in December. The average loan amount was $223,000 in January, up $1,300 from $221,700 in December.
Recorded information on this index is available by calling (202) 649-3993. For technical questions on this index, please call David Roderer at (202) 649-3206. The January index value will be announced on March 27, 2012.
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 2,646 reported loans from 28 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) 649-3032
Stefanie Johnson (202) 649-3030