Washington, D.C. – The Federal Housing Finance Agency today reported that the average interest rate on conventional 30-year, fixed-rate, mortgage loans of $417,000 or less decreased 66 basis points to 5.51 percent in December. The average interest rate on 15-year, fixed-rate loans of $417,000 or less decreased 44 basis points to 5.43 percent in December. These rates are calculated from the FHFA’s Monthly Interest Rate Survey (MIRS) of purchase-money mortgages. These results reflect loans closed during the December 24–31 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-November.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 5.52 percent in December down 63 basis points from 6.15 percent in November. The effective interest rate, which reflects the amortization of initial fees and charges, was 5.61 percent in December down 63 basis points from 6.24 percent in November.

This report contains no data on adjustable-rate mortgages due to insufficient sample size.

Initial fees and charges were 0.64 percent of the loan balance in December, up 0.04 percent from November. Forty-seven percent of the purchase-money mortgage loans originated in December were "no-point" mortgages, down from forty-eight percent in November. The average term was 28.7 years in December, unchanged from November. The average loan-to-price ratio in December was 75.1 percent, down from 76.6 percent in November. The average loan amount increased by $6,800 to $218,000 in December.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some ARM contracts, was 5.51 percent based on loans closed in December. This is a decrease of 0.67 percent from the previous month. This Contract rate series can be found at www.fhfa.gov/DataTools/Downloads/Pages/Monthly-Interest-Rate-Data.aspx.

Source: FHFA

The MIRS was previously released by the Federal Housing Finance Board (FHFB). Recorded information on this index is available by calling (202) 408-2940. For technical questions on this index, please call David Roderer at (202) 408-2540. The January index value will be announced on February 26, 2009.

Technical note: The data is based on a monthly survey of major lenders that are asked to report the terms and conditions on all conventional, single-family, fully amortized, purchase-money loans closed the last five working days of the month. The data thus excludes FHA-insured and VA-guaranteed mortgages, refinancing loans, and balloon loans. This month’s data is based on 4,300 reported loans from 41 lenders, representing 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, which is the historical assumption of the average life of a mortgage loan. The data is weighted to reflect the shares of mortgage lending by lender size and lender type as reported in the latest release of the Federal Reserve Board’s Home Mortgage Disclosure Act data.