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Interest rates down, housing prices up says Federal Housing Finance Agency

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The Federal Housing Finance Agency (FHFA) announced today that home purchase prices went up by a half percent in October on a seasonal adjusted basis from September. Interest rates reported for November decreased by 0.1 percent over October.

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Since mortgage loans are generally locked for 30-45 before the loan is closed, these two reports actually cover roughly the same time period.

According to FHFA, the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.21 percent for loans closed in late November. The index is derived by using the FHFA Monthly Interest Rate Survey. The effective interest rate (which includes fees and other charges) was 4.38 percent which was down from October’s report of 4.49 percent by 0.11 basis points. Rates have been dropping since September.

Average loan amounts also dropped in October from $269,000 to $264,900. This is somewhat interesting since home prices are rising but loan amounts are dropping.

Home prices went up this month after four months of drop in prices. The Mountain (1.2%), Pacific (1.1%), Mid Atlantic (1.0%) and the South Atlantic (0.9) divisions lead the country in price increase for the month. Biggest loser for the month was the East South Central division with a drop of 1.0% for the month and the only negative for the country. All areas of the country had positive change for the 12 month period ranging from +4.7% for the East South Central division up to +17.5 percent for the Pacific division.

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage markets and financial institutions.

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.

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