HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates for all categories of loans decreased from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 7.47 percent in the third quarter of 1997, 46 basis points lower than the previous quarter and 69 basis points lower than the third quarter of 1996. Adjustable-rate mortgages in the third quarter were going for 5.56 percent, 23 basis points below the previous quarter and 33 basis points below the third quarter of 1996. Fixed-rate, 15-year mortgages, at 7.01 percent, were down 45 basis points from last quarter and down 67 basis points from the third quarter of the previous year. The FHA rate decreased 48 basis points during the third quarter and was 66 basis points below the same quarter in 1996. It should be noted that we are reporting the average interest rate quote for the FHA series rather than the most active quote.

Sources: Federal Home Loan Mortgage Corporation; Office of Housing, Department of Housing and Urban Development

FHA 1-4 Family Mortgage Insurance*

Applications for FHA mortgage insurance on 1-4 family homes were received for 302,900 (not seasonally adjusted) properties in the third quarter of 1997, up 4 percent from the previous quarter and up 21 percent from the third quarter of 1996. Endorsements or insurance policies issued totalled 178,000, down 10 percent from the second quarter of 1997 and down 19 percent from the third quarter of 1996. Endorsements for refinancing were 16,400, down 21 percent from the second quarter of 1997 and down 31 percent from a year earlier.

*Units in thousands of properties. Source: Office of Housing, Department of Housing and Urban Development

PMI and VA Activity*

Private mortgage insurers issued 267,700 policies or certificates of insurance on conventional mortgage loans during the third quarter of 1997, up 14 percent from the second quarter and down 6 percent from the third quarter of 1996; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 67,600 single-family properties in the third quarter of 1997, up 15 percent from the previous quarter and down 14 percent from the third quarter of 1996.

*Units in thousands of properties. Sources: PMI-Mortgage Insurance Companies of America; VA-Department of Veterans Affairs

Mortgage Originations by Loan Type, 1-4 Family Units

The total value of mortgage originations for 1-4 family homes was $192.8 billion in the second quarter of 1997, up 12 percent from the first quarter of 1997. Uninsured mortgage volume increased 18 percent; privately insured mortgages increased 14 percent; VA-guarantied mortgages decreased 6 percent; and FHA-insured mortgages decreased 24 percent. The overall decrease from the second quarter of 1996 was 8 percent. VA-guarantied mortgages decreased 38 percent; FHA mortgage volume decreased 28 percent; privately insured mortgages decreased 18 percent; and uninsured mortgages decreased 1 percent. Market shares changed to reflect changes in volumes during the second quarter of 1997. FHA decreased 3.4 percentage points while uninsured increased 3.7 percentage points. Shares for VA and private insurance changed less than 1 percentage point.

*Includes Rural Housing Service (formerly Farmers Home Administration) loans. **Market shares and percentages are computed from unrounded data. Sources: Mortgage Insurance Companies of America and HUD Survey of Mortgage Lending Activity

Residential Mortgage Originations by Building Type*

Residential mortgage originations totalled $192.8 billion in the second quarter of 1997, up 12 percent from the first quarter of 1997 but down 8 percent from the second quarter of 1996 and identical to the single-family mortgage pattern. The financing volume for multifamily (5+) units totalled $11.3 billion in the second quarter, up 3 percent from the previous quarter but down 12 percent from the second quarter of 1996.

*Billions of dollars. Source: HUD Survey of Mortgage Lending Activity

Mortgage Originations by Lender Type, 1-4 Family Units

During the second quarter of 1997, savings and loans with a volume of $34.4 billion and a market share of 17.8 percent increased their volume 38 percent; mutual savings banks with a volume of $6.3 billion and a market share of 3.3 percent increased their volume 11 percent; commercial banks with a volume of $53.1 billion and a market share of 27.5 percent showed a 10-percent increase from the first quarter of 1997; and mortgage companies with the largest volume, $97.6 billion, and highest market share, 50.6 percent, increased 6 percent from the previous quarter. Other lenders were unchanged from a very small volume and market share. However, data are based on a newly introduced sample design that calls into question comparisons of current and previous data. More data from the newly introduced sample design must be collected before the series can be used with confidence for time-to-time comparisons.

Source: HUD Survey of Mortgage Lending Activity

Delinquencies and Foreclosures

Total delinquencies were at 4.24 percent at the end of 1997's second quarter, 3 percent below the first quarter and 3 percent below the second quarter of 1996. Ninety-day delinquencies were at 0.58 percent, up 4 percent from the first quarter of 1997 but down 8 percent from the second quarter of 1996. During the second quarter of 1997, 0.34 percent of loans entered foreclosures, 8 percent below the previous quarter but up 3 percent from the second quarter of 1996.

Source: National Delinquency Survey, Mortgage Bankers Association