Today, the Federal Housing Finance Agency (FHFA) reported that interest rates on home mortgages remained essentially the same in August. The same was true for the subset of mortgages used to purchase new homes.
On conventional mortgages for new homes, the changes in August were both very small and offsetting. While the average contract interest rate increased by a single basis point to 4.13 percent, the average initial fee (which has the potential to offset a small change in the contract rate) edged down from 1.20 to 1.15 percent. The result was an average effective interest rate (which amortizes initial fees over the estimated life of the loan) that remained constant at 4.25 percent.
The mortgage market has been relatively stable recently, with very little change in rates on new home loans since June.
While the changes to interest rates remained small to non-existent, prices of homes purchased with the loans declined somewhat. The average price of a new home purchased with a conventional mortgage in August dropped by $12,000 (roughly 3 percent) to $411,800—the lowest it’s been since February.
The information in this post is based on FHFA’s Monthly Interest Rate Survey (MIRS) of loans closed during the last five working days of August. For additional caveats and information about the survey, see the technical note at the end of FHFA’s September 30 news release.