HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates for three of the four 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 7.05 percent in the first quarter of 1998, 14 basis points lower than the previous quarter and 74 basis points lower than the first quarter of 1997. Adjustable-rate mortgages in the first quarter were going for 5.61 percent, 10 basis points above the previous quarter and 5 basis points above the first quarter of 1997. Fixed-rate, 15-year mortgages, at 6.65 percent, were down 10 basis points from the last quarter and down 64 basis points from the first quarter of 1997. The FHA rate decreased 26 basis points during the first quarter and was 75 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 379,100 (not seasonally adjusted) properties in the first quarter of 1998, up 38 percent from the previous quarter and up 54 percent from the first quarter of 1997. Endorsements or insurance policies issued totaled 254,700, down 4 percent from the fourth quarter of 1997 and up 28 percent from the first quarter of 1997. Endorsements for refinancing were 60,400, up 83 percent from the fourth quarter of 1997 and up 151 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 275,100 policies or certificates of insurance on conventional mortgage loans during the first quarter of 1998, up 3 percent from the fourth quarter and up 34 percent from the first quarter of 1997; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 82,700 single-family properties in the first quarter of 1998, up 28 percent from the previous quarter and up 30 percent from the first 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 originations for 1-4 family homes was $221.9 billion in the third quarter of 1997, up 12 percent from the second quarter of 1997. Uninsured mortgage volume increased 14 percent; privately insured mortgages increased 16 percent; VA-guarantied mortgages increased 17 percent; and FHA-insured mortgages decreased 13 percent. The overall increase in originations from the third quarter of 1996 was 16 percent. VA-guarantied mortgages decreased 10 percent; FHA mortgage volume decreased 19 percent; privately insured mortgages decreased 2 percent; however, uninsured mortgages increased 28 percent. Market shares changed to reflect changes in volumes during the third quarter of 1997. FHA decreased 1.9 percentage points while uninsured increased 1.2 percentage points. Shares for VA and privately insured 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 totaled $231.4 billion in the third quarter of 1997, up 11 percent from the second quarter of 1997 and up 15 percent from the third quarter of 1996. The financing volume for multifamily (5+) units totaled $9.5 billion in the third quarter, down 12 percent from the previous quarter and down 10 percent from the third quarter of 1996.

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

Mortgage Originations by Lender Type, 1–4 Family Units

During the third quarter of 1997, savings and loans with a volume of $34.5 billion and a market share of 15.5 percent had no change in their volume; mutual savings banks with a volume of $5.2 billion and a market share of 2.3 percent decreased their volume 17 percent; commercial banks with a volume of $52.7 billion and a market share of 23.7 percent showed a 1 percent decrease from the second quarter of 1997; and mortgage companies with the largest volume, $128.1 billion, and highest market share, 57.7 percent, increased 24 percent from the previous quarter. Other lenders, accounting for a very small volume and market share, had an increase of 8 percent in volume but declined 4 percent in market share from 1997's second quarter.

Source: HUD Survey of Mortgage Lending Activity

Delinquencies and Foreclosures

Total delinquencies were at 4.36 percent at the end of 1997's fourth quarter, up 2 percent from the third quarter and up 1 percent from the fourth quarter of 1996. Ninety-day delinquencies were at 0.62 percent, up 9 percent from the third quarter of 1997 and up 2 percent from the fourth quarter of 1996. During the fourth quarter of 1997, 0.37 percent of loans entered foreclosures, 6 percent above the previous quarter and 12 percent above the fourth quarter of 1996.

Source: National Delinquency Survey, Mortgage Bankers Association