HOUSING FINANCE

Mortgage Interest Rates

The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac declined to 6.07 percent in the fourth quarter of 2002, 22 basis points lower than the previous quarter and 71 basis points lower than the fourth quarter of 2001. Adjustable-rate mortgages in the fourth quarter were going for 4.18 percent, 21 basis points below the previous quarter and 106 basis points below the fourth quarter of 2001. Fixed-rate, 15-year mortgages, at 5.47 percent, were down 24 basis points from the third quarter of this year and down 79 basis points below the fourth quarter of 2001.

The annual interest rate on 30-year, fixed-rate, conventional mortgages fell 43 basis points to 6.54 percent from 2001 to 2002.

FHA 1-4 Family Mortgage Insurance*

Applications for FHA mortgage insurance on 1–4 family homes were received for 398,700 (not seasonally adjusted) properties in the fourth quarter of 2002, down 4 percent from the previous quarter and down 11 percent from the fourth quarter of 2001. Total endorsements or insurance policies issued totaled 289,400, up 1 percent from the third quarter of 2002. Purchase endorsements, at 165,100, were down 19 percent from the previous quarter and were down 26 percent from the fourth quarter of 2001. Endorsements for refinancings increased to 124,200, a 48-percent increase from the third quarter and up 1 percent from the fourth quarter a year ago.

The number of applications received in 2002 declined 14 percent to 1,521,700 from the previous year. There were 441,400 total endorsements, an increase of 21 percent over the past year.

PMI and VA Activity*

Private mortgage insurers issued 653,800 policies or certificates of insurance on conventional mortgage loans during the fourth quarter of 2002, up 20 percent from the third quarter of 2002 and up 12 percent from the fourth quarter of 2001; these numbers are not seasonally adjusted. The Department of Veterans Affairs (VA) reported the issuance of mortgage loan guaranties on 91,200 single-family properties in the fourth quarter of 2002, up 27 percent from the previous quarter and up 14 percent from the fourth quarter of 2001.

In 2002 there were 2,305,700 private mortgage certificates of insurance issued on conventional loans, a gain of 16 percent above the previous year. VA loan guaranties rose 17 percent to 328,100 in 2002.

Delinquencies and Foreclosures

Total delinquencies were at 4.66 percent at the end of 2002’s third quarter, down 2 percent from the second quarter of 2002 and down 4 percent from the third quarter of 2001. Ninety-day delinquencies were 0.82, up 5 percent from the second quarter of 2002 and up 14 percent from the third quarter a year ago. During the third quarter of 2002, 0.37 percent of loans entered foreclosure, down 8 percent from the second quarter of 2002 but unchanged from the third quarter of the previous year.