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Federal Housing Finance Agency Reports Mortgage Interest Rates

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RISMEDIA, March 31, 2011—The Federal Housing Finance Agency has 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 4.79 percent based on loans closed in February. This is an increase of 0.08 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 12 basis points to 4.97 percent in February. 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 Feb. 22-28 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-January.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.80 percent in February, up 10 basis points from 4.70 percent in January. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.92 percent in February, up 11 basis points from 4.81 percent in January.

This report contains no data on adjustable-rate mortgages due to insufficient sample size.

Initial fees and charges were 0.80 percent of the loan balance in February, unchanged from January. Thirty percent of the purchase-money mortgage loans originated in February were “no-point” mortgages, down from 34 percent in January. The average term was 27.2 years in February, down 0.1 years from 27.3 years in January. The average loan-to-price ratio in February was 74.7 percent, up 1.3 percent from 73.4 percent in January. The average loan amount was $216,900 in February, up $14,500 from $202,400 in January.

Technical note: The data is 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 4,379 reported loans from 34 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 is 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.

For more information visit www.fhfa.gov.

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