Earlier today, the Federal Housing Finance Agency (FHFA) reported that mortgage interest rates declined in September. That was true as well for the subset of mortgages used to purchase newly built homes, but the changes were very small. On conventional mortgages for new homes, the average contract interest rate edged down by just 2 basis points, to 4.11 percent.
However, the decline in the average fee was not enough to drive the average effective interest rate (which amortizes the initial fee over the estimated life of the loan) down by more than 2 basis points, to 4.23 percent. Except for these minor fluctuations, the average terms on conventional new home mortgages have been stable for the past four months.
Also in September, the average price of a new home purchased with a convention loan, and the average amount of the loan, both increased. The average loan amount went from $314,200 to $319,800, while the average new home purchase price went from $411,800 to $422,300. Each has been hovering within a relatively narrow band since March.
The above information is based on FHFA’s Monthly Interest Rate Survey (MIRS) of loans closed during the last five working days in September. For other details about the survey, see the technical note at the end of FHFA’s October 30 news release.