Washington, D.C. – National data shows interest rates on mortgages decreased in February. Contract mortgage interest rates decreased 0.07 percent from January to February, according to an index of new mortgage contracts.

According to the Federal Housing Finance Agency (FHFA), the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.30 percent for loans closed in late February. The index is calculated using FHFA’s Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.22 percent, down 14 basis points from 4.36 in January.

Interest rates are typically locked in 30-45 days before a loan is closed. Consequently, February data reflects market rates from mid-to-late January. The effective interest rate was 4.38 percent, down 14 basis points from 4.52 percent in January. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.

FHFA’s interest rate survey shows the average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.45 in February, a decrease of 22 basis points. The average loan amount for all loans was $275,700 in February down $8,700 from $284,400 in January. FHFA will release March index values Tuesday, April 29th, 2014.

For more information, call David Roderer at (202) 649-3206. You can hear recorded index information by calling (202) 649-3993. You can find the complete contract rate series at www.fhfa.gov/DataTools/Downloads/Pages/Monthly-Interest-Rate-Data.aspx.

Source: FHFA

Technical note: The data are based on a small monthly survey of mortgage lenders, which may not be representative. The sample is not a statistical sample but is rather a convenience sample. Survey respondents were asked to report terms and conditions of all conventional, single-family, fully amortized purchase-money loans closed during the last five working days of the month. The data did not include mortgages guaranteed or insured by the Federal Housing Administration or the U.S. Department of Veterans Affairs. Data also excluded refinancing loans and balloon loans. February 2014 data are based on 4,091 reported loans from 24 lenders, which include savings associations, mortgage companies, commercial banks, and mutual savings banks. The effective interest rate includes the amortization of initial fees and charges over a 10-year period (the historical assumption of the average life of a mortgage loan).