Washington, D.C. – National data show interest rates on mortgages decreased from April to May, 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 4.18 percent for loans closed in late May.  The index is calculated using FHFA's Monthly Interest Rate Survey.  The contract rate on the composite of all mortgage loans was 4.13 percent, a decrease from 4.23 percent in April.

Interest rates are typically locked in 30-45 days before a loan is closed.  Consequently, May data reflect market rates from mid- to late-April. The effective interest rate was 4.28 percent, down 10 basis points from 4.38 percent in April. 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 4.37  in May, a decrease of 16 basis points.  The average loan amount for all loans was $282,600 in May down $1,200 from $283,800 in April.

FHFA will release June index values Thursday, July 31, 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 http://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 either guaranteed or insured by either the Federal Housing Administration or the U.S. Department of Veterans Affairs.  Data also excluded refinancing loans and balloon loans.  May 2014 data are based on 5,734 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).