HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates decreased between 19 and 25 basis points on fixed-rate mortgages from the previous quarter and decreased between 83 and 103 basis points from a year ago. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 6.78 percent in the fourth quarter of 2001, 19 basis points lower than the previous quarter and 83 basis points lower than the fourth quarter of 2000. Adjustable-rate mortgages in the fourth quarter were going for 5.24 percent, 42 basis points below the previous quarter and 193 basis points below fourth quarter of 2000. Fixed-rate, 15-year mortgages, at 6.26 percent, were down 25 basis points during the fourth quarter and 103 basis points below the same quarter in 2000.

Annually, the average interest rate on the 30-year fixed rate mortgages declined 108 basis points to a rate of 6.97 percent from 2000 to 2001.

FHA 1-4 Family Mortgage Insurance*

Applications for FHA mortgage insurance on 1-4 family homes were received for 446,100 (not seasonally adjusted) properties in the fourth quarter of 2001, up 10 percent from the previous quarter and up 68 percent from the fourth quarter of 2000. Total endorsements or insurance policies issued totaled 346,600, up 9 percent from the third quarter of 2001. Purchase endorsements at 223,000 were up 1 percent from the third quarter of 2001 and were up 5 percent from the fourth quarter of 2000. Endorsements for refinancings increased to 123,500, a 29-percent rise from the previous quarter, and were up 593 percent from the fourth quarter a year ago. For 2001, FHA mortgage insurance applications rose to 1,760,300, a 52-percent increase over the previous year. Total endorsements increased by 33 percent above the prior year to 1,182,400. Purchase endorsements declined 1 percent for the year. Annual refinancings increased from the year 2000 by 459 percent to 364,300.

PMI and VA Activity*

Private mortgage insurers issued 584,800 policies or certificates of insurance on conventional mortgage loans during the fourth quarter of 2001, up 13 percent from the third quarter of 2001 and up 79 percent from the fourth quarter of 2000; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs (VA) reported the issuance of mortgage loan guaranties on 80,300 single-family properties in the fourth quarter of 2001, up 1 percent from the previous quarter and up 65 percent from the fourth quarter of 2000. Annually, private mortgage insurers issued 1,987,700 certificates, 61 percent more certificates in 2001 than in 2000. The number of VA mortgage guaranties reported were 281,532, a 51-percent gain over the past year.

Delinquencies and Foreclosures

Total delinquencies were at 4.87 percent at the end of 2001's third quarter, up 5 percent from the second quarter of 2001 and up 21 percent from the third quarter of 2000. Ninety-day delinquencies were at 0.73 percent, up 6 percent from the second quarter of 2001 and up 30 percent from the third quarter a year ago. During the third quarter of 2001, 0.38 percent of loans entered foreclosures, up 6 percent from the second quarter of 2001 and up 23 percent from the third quarter of the previous year.