HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates decreased between 10 and 20 basis points from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 6.87 percent in the third quarter of 1998, 22 basis points lower than the previous quarter and 60 basis points lower than the third quarter of 1997. Adjustable-rate mortgages in the third quarter were going for 5.56 percent, 12 basis points below the previous quarter but unchanged from the third quarter of 1997. Fixed-rate, 15-year mortgages, at 6.55 percent, were down 19 basis points from the last quarter and down 46 basis points from the third quarter of 1997. The FHA rate decreased 13 basis points during the third quarter and was 65 basis points below the same quarter in 1997. 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 378,800 (not seasonally adjusted) properties in the third quarter of 1998, unchanged from the previous quarter and up 25 percent from the third quarter of 1997. Endorsements or insurance policies issued totaled 320,500, up 31 percent from the second quarter of 1998 and up 80 percent from the third quarter of 1997. Endorsements for refinancing were 85,700, up 14 percent from the second quarter of 1998 and up 423 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 399,500 policies or certificates of insurance on conventional mortgage loans during the third quarter of 1998, up 9 percent from the second quarter and up 49 percent from the third quarter of 1997; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 101,800 single-family properties in the third quarter of 1998, up 7 percent from the previous quarter and up 50 percent from the third quarter of 1997.

*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 origination for 1-4 family homes was $266.9 billion in the fourth quarter of 1997, up 20 percent from the third quarter of 1997. Uninsured mortgage volume increased 22 percent; privately insured mortgages increased 1 percent; VA-guarantied mortgages decreased 6 percent; and FHA-insured mortgages increased 58 percent. The overall increase in originations from the fourth quarter of 1996 was 40 percent. VA-guarantied mortgages decreased 3 percent; FHA mortgage volume increased 36 percent; privately insured mortgages increased 17 percent; and uninsured mortgages increased 47 percent. Market shares changed to reflect changes in volumes during the fourth quarter of 1997, FHA increased 2.2 percentage points while uninsured increased 1 percentage point. Shares for VA declined less than 1 percentage point while privately insured decreased 2.4 percentage points.

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

Residential Mortgage Originations by Building Type

Residential mortgage originations totaled $283.5 billion in the fourth quarter of 1997, up 22 percent from the third quarter of 1997 and up 39 percent from the fourth quarter of 1996. The financing volume for multifamily (5+) units totaled $16.6 billion in the fourth quarter, up 75 percent from the previous quarter and up 31 percent from the fourth quarter of 1996.

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

Mortgage Originations by Lender Type, 1-4 Family Units

During the fourth quarter of 1997, savings and loans with a volume of $36.9 billion and a market share of 13.8 percent had an increase in volume of 6 percent; mutual savings banks with a volume of $4.7 billion and a market share of 1.8 percent decreased volume by 10 percent; commercial banks with a volume of $52.6 billion and a market share of 19.7 percent had no change in volume from the third quarter of 1997; and mortgage companies with the largest volume, $171.4 billion, and the highest market share, 64.2 percent, increased 34 percent from the previous quarter. Other lenders, accounting for a very small volume and market share, had a decrease of 7 percent in volume and a 0.1 percentage point decline in market share from 1997's third quarter.

Source: HUD Survey of Mortgage Lending Activity

Delinquencies and Foreclosures

Total delinquencies were at 4.33 percent at the end of 1998's second quarter, down 3 percent from the first quarter of 1998 but up 2 percent from the second quarter of 1997. Ninety-day delinquencies were at 0.61 percent, down 2 percent from the first quarter of 1998 but up 5 percent from the second quarter of 1997. During the second quarter of 1998, 0.35 percent of loans entered foreclosures, unchanged from the previous quarter but 3 percent above the second quarter of 1997.

Source: National Delinquency Survey, Mortgage Bankers Association