For release at 8:30 a.m. EDT Friday, June 26, 1998 FHFB 98-26 (MIRS)

For further information contact: Timothy D. Forsberg (202) 408-2967

Washington, D.C. -- The Federal Housing Finance Board today reported that interest rates changed little during the month of May. Interest rates on conventional 30-year, fixed-rate mortgage loans remained at 7.21 percent. The rate on 15-year, fixed-rate loans increased by 2 basis points to 7.01 percent.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) decreased by 1 basis point to 7.08 percent. The effective interest rate, which reflects the amortization of initial fees and charges, remained the same at 7.21 percent. The average contract rate on fixed-rate mortgages remained at 7.18 percent, while the average contract rate on adjustable-rate mortgages (ARMs) decreased by 1 basis point to 6.44 percent.

Initial fees and charges were 0.89 percent of the loan balance in May, up from 0.82 percent in April. Twenty-six percent of the purchase-money mortgage loans originated in May were "no-point" mortgages, the same as in April. The average term was 27.9 years in May, up from 27.8 years in April. The average loan-to-price ratio in May decreased to 78.8 percent from 79.4 percent in April. The average loan amount increased by $2,900 to $133,100, while the average house purchase price increased by $4,500 to $174,700.

Table VII presents information on the share of the mortgage market by product type. The trends indicated in this table include a continued increase in the market share of nonjumbo 15- and 30-year fixed-rate loans.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, a popular ARM index, decreased to 7.08 percent based on loans closed in May. This is a decrease of 0.01 percent from the previous month.

Recorded information on this index is available by calling (202) 408-2940. The June index value will be announced on July 27, 1998.

The Federal Housing Finance Board maintains telephone lines that give recorded information on the current value of many of the interest rates reported in this release. That phone number is (202) 408-2624. This recording will be next updated on July 27, 1998.

Information from this survey is available at www.fhfb.gov/mirs.htm and also on-line from the U.S. Department of Commerce's Economic Bulletin Board. To subscribe to this service, call (202) 482-1986.

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 25,351 reported loans from 176 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 type as reported in the latest release of the Federal Reserve Board’s Home Mortgage Disclosure Act data.

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