The Federal Housing Finance Agency (FHFA) released today their interest rate survey showing mortgage interest rates went up 0.25 percent from July to August. However, since the Fed announcement of the continued purchase of mortgage backed securities, rates for September have stabilized and in some cases dropped some with the current 30 year fixed rate hovering around 4%.
According to FHFA, rates in July were at 4.00 percent with August survey results coming in 4.25 percent. This number is arrived through the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lender index.
Home interest rates are typically locked for 30 to 45 days. Therefore, the August rates reflect market rates from mid-to-late July. The effective interest rate (APR) was actually at 4.40 according to the index, up 28 basis points (0.28 percent0 from 4.12 percent effective rate in July. Effective interest rate or APR includes additional fees in a mortgage loan that are considered finance charges, such as origination fee, discount fee, processing fee and underwriting fee among others.
The survey also calculates average loan amounts. The August average was $274,500, down from the $278,200 in July.
Interest rate rise has been partially blamed for a recent slowdown in new/existing home purchases. In comparison, the FHFA announcement from five years go, reflect increase in mortgage rates up to 6.49 percent and average loan amount of $221,200. The effective rate at that time was 6.5 percent.
The FHFA regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. Mortgage markets and financial institutions. The index does not include mortgages guaranteed by the Federal Housing Administration (FHA) or the U.S. Department of Veterans Affairs (VA). It also does not include refinancing information.
About the author: Fred Chamberlin was a senior loan officer with Guild Mortgage Company in Oak Harbor. He was in the mortgage origination business for over 20 years and in the lending business for over 30 and authors a number of mortgage related blogs.