HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates decreased between 7 and 32 basis points from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 6.77 percent in the fourth quarter of 1998, 10 basis points lower than the previous quarter and 42 basis points lower than the fourth quarter of 1997. Adjustable-rate mortgages in the fourth quarter were going for 5.49 percent, 7 basis points below the previous quarter and 2 basis points below the fourth quarter of 1997. Fixed-rate, 15-year mortgages, at 6.42 percent, were down 13 basis points during the fourth quarter and 33 basis points below the same quarter in 1997. The FHA rate decreased 32 basis points during the fourth quarter and was 72 basis points below the same quarter in 1997. The annual rates in all the mortgage categories declined from 1997 to 1998 as well. The 30-year mortgages, both conventional and FHA, declined to levels not seen since the early 1970s. Conventional fixed-rate mortgages declined 64 basis points to 6.95 percent. The 1-year adjustable-rate mortgages declined 1 basis point to 5.59 percent, while the 15-year fixed-rate mortgages declined 54 basis points to 6.59 percent. The FHA mortgages dropped to 7.12 percent, declining 78 basis points.

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 424,700 (not seasonally adjusted) properties in the fourth quarter of 1998, up 12 percent from the previous quarter and up 55 percent from the fourth quarter of 1997. Total endorsements or insurance policies issued totaled 290,800, down 9 percent from the third quarter of 1998. Endorsements for refinancing were 92,900, up 8 percent from the third quarter and up 33,000 or 182 percent from the fourth quarter of 1997. Applications, total endorsements, and purchase endorsements for 1998 were 1,563,400, 1,110,500, and 313,700, respectively. The number for applications is the highest since 1993, and the number for endorsements is the largest since 1994.

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

PMI and VA Activity*

Private mortgage insurers issued 431,700 policies or certificates of insurance on conventional mortgage loans during the fourth quarter of 1998, up 8 percent from the third quarter and up 62 percent from the fourth quarter of 1997; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 105,300 single-family properties in the fourth quarter of 1998, up 3 percent from the previous quarter and up 63 percent from the fourth quarter of 1997. For 1998, private mortgage insurers issued 1,473,300 policies and the U.S. Department of Veterans Affairs guarantied 384,600 certificates. The number of policies issued by private mortgage insurers set a new record, while the number of U.S. Department of Veterans Affairs' 1998 guaranties was higher in 1994.

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

Delinquencies and Foreclosures

Total delinquencies were at 4.37 percent of 1998's third quarter, up 1 percent from the second quarter of 1998 and up 3 percent from the third quarter of 1997. Ninety-day delinquencies were at 0.62 percent, up 2 percent from the second quarter of 1998 and up 9 percent from the third quarter of 1997. During the third quarter of 1998, 0.36 percent of loans entered foreclosures, up 3 percent from both the previous quarter and the third quarter of 1997.

Source: National Delinquency Survey, Mortgage Bankers Association