Checking in on the average mortgage rates reported by the MBA and Freddie Mac for any big changes after the Fed announced their quantitative easing plans…
As usual around here, Friday means it is time to check in on the average mortgage rates reported by the MBA and Freddie Mac. After everyone getting surprised by the Federal Reserve delaying any “tapering” of quantitative easing, we should see more movement than last week.
But to kick things off, let’s talk about the mortgage rate report that the FHFA released this week:
Let me start by saying that the data from FHFA is about mortgage rates in August so it is not as up to date as the reports from Freddie and the MBA. And for the most up to date info, you should call your lender since rates changes not just every day, but they can change several times a day!
Any way, FHFA reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.26% for loans closed in late August. The index is calculated using FHFA’s Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.25%, up 25 basis points from 4.00 in July.
Check out the chart from FHFA:
This chart just shows what mortgage rates were doing before the Fed announced they were not making any changes to quantitative easing. Which makes the reports from Freddie and the MBA even more important!
Freddie Mac Reported:
Good news for buyers as Freddie is reporting that mortgage rates fell this week:
- 30-year fixed-rate mortgages averaged 4.32%
- This is down from last week when it averaged 4.50%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.40%
- 15-year fixed-rate mortgages averaged 3.37%
- This is down from last week when it averaged 3.54%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.73%
Check out the chart from Freddie Mac that shows how the average mortgage rates dropped after the Fed’s announcement:
The Mortgage Bankers Association Reported:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.62% from 4.75%, with points increasing to 0.41 from 0.39 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.66% from 4.83%, with points decreasing to 0.29 from 0.33 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.32% from 4.50%, with points decreasing to 0.37 from 0.41 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.68% from 3.81%, with points decreasing to 0.28 from 0.34 (including the origination fee) for 80% loan-to-value ratio loans.
The Take Away:
I am sure many are rejoicing the drop in mortgage rates because the Fed announced they are not changing quantitative easing. I hope every one realizes that when the Fed does start to taper, it means that rates will increase.
When will the Fed start to taper QE? It could be next month or it could be next year. It all depends on how the economy is doing.
Plus with the upcoming tighter lending requirements that kick in January 1, 2014, my advice to anyone thinking about buying is to not waste time. And when I say you shouldn’t waste any time, that includes starting your search for a home before you have talked to a lender and received a Pre-Approval Letter.
Serious buyers make serious offers. And serious offers always include a Pre-Approval Letter (or Proof of Funds if you are paying ALL CASH). Besides, experienced Buyer’s Agents won’t waste much time working with anyone that refuses to talk to a lender.
As always, I am providing this to you for informational purposes only! I am not a mortgage lender and you should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.