PMMS : U.S. Mortgage Rates Inch Backward

by Ike Obudulu Posted on August 10th, 2018

McLean, Virginia, USA : Mortgage rates were mostly unchanged over the past week, but did ease up slightly according to the results of the Primary Mortgage Market Survey (PMMS), released by the Federal Home Loan Mortgage Corporation, Freddie Mac (OTCQB: FMCC) on Thursday.

30-year fixed-rate mortgage (FRM) averaged 4.59 percent with an average 0.5 point for the week ending August 9, 2018, down from last week when it averaged 4.60 percent. A year ago at this time, the 30-year FRM averaged 3.90 percent.

15-year FRM this week averaged 4.05 percent with an average 0.5 point, down from last week when it averaged 4.08 percent. A year ago at this time, the 15-year FRM averaged 3.18 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.90 percent with an average 0.3 point, down from last week when it with an average 3.93 percent. A year ago at this time, the 5-year ARM averaged 3.14 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Sam Khater, Freddie Mac’s chief economist, says mortgage rates have mostly drifted sideways this summer. “This stability is much needed for home sales, which have crested because of the multi-year run up in prices, tight affordable inventory and this year’s higher rates,” he said. “Going forward, the strong economy will support the housing market, but with affordability pressures mounting, further spikes in mortgage rates will lead to continued softening in home price growth.”

Added Khater, “There continues to be a steady rate of job creation, but as we’ve seen throughout most of this economic expansion, wage growth is not meaningfully increasing above inflation. With home prices still climbing and mortgage rates up from 3.90 percent a year ago, some prospective buyers are definitely feeling an affordability crunch.”

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since it’s creation by Congress in 1970, Freddie Mac has made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers.

Primary Mortgage Market Survey Definitions

Commitment Rate : The interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.

ARM Index ; The one-year Treasury

Loan to Value Ratio (LTV) : The ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.

Origination Fees and Discount Points : The total charged by the lender at settlement. One point equals one percent of the loan amount.

Margin : A fixed amount added to the underlying index to establish the fully indexed rate for an ARM.

Primary Mortgage Market Survey

Since April 1971, Freddie Mac has surveyed lenders across the nation weekly to determine the average 30-year fixed-rate mortgage rate; in 1984, the 1-year ARM was added to the survey and the 15-year fixed-rate mortgage rate was included beginning in 1991. In January 2005, Freddie Mac added a 5/1 hybrid ARM series to the survey. In January 2016, the 1-year ARM was discontinued.

Currently, about 25 lenders from each of Freddie Mac’s five regions are surveyed each week. The mix of lenders surveyed approximates the volume of mortgage loans that each lender type originates nationwide.

Survey reminder emails are sent out on Mondays and lenders are asked to respond by close of business Wednesday. If we have received no response on Tuesday, Freddie Mac follows up with a reminder email on Wednesday morning. Freddie Mac receives a few responses on Monday, but most responses are returned on Tuesday with the balance received on Wednesday. So, in general, the PMMS rates reflect loans offered Monday through Wednesday.

The survey results each week are weighted based on the most recently released dollar volume of conventional, single-family originations within the Freddie Mac one-unit loan limit reported under the Home Mortgage Disclosure Act (HMDA) data – prior survey averages are not adjusted. The HMDA data are typically published in September of each year for the immediately prior year. To do the weighting, Freddie Mac takes the HMDA state origination volumes and aggregate them to the five regions to establish regional weightings. A national average is then calculated as the weighted average of the five regional averages. In addition, when calculating the regional averages, we discard any rate/point combination outlier that is more than one standard deviation from the region’s mean.

 

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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