HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates increased between 2 and 27 basis points from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 7.85 percent in the fourth quarter of 1999, 2 basis points higher than the previous quarter and 108 basis points higher than the fourth quarter of 1998. Adjustable-rate mortgages in the fourth quarter were going for 6.40 percent, 27 basis points above the previous quarter and 91 basis points above the fourth quarter of 1998. Fixed-rate, 15-year mortgages, at 7.46 percent, were up 2 basis points during the fourth quarter and 104 basis points above the same quarter in 1998. The FHA rate increased 3 basis points to 7.98 percent during the fourth quarter of this year and was 117 basis points above the same quarter in 1998.

Annual rates rose as well. The year 1999 ended with home mortgage loan commitments up nearly a half of a percent in all categories. The conventional 30-year, fixed-rate mortgage increased 49 basis points to 7.44 percent, while the FHA 30-year loan rose to 7.53 percent, a gain of 41 basis points. The conventional arms rose 47 basis points to 5.98 percent, and the conventional 15-year mortgage gained 47 basis points for an annual average rate of 7.06 percent.

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 252,300 (not seasonally adjusted) properties in the fourth quarter of 1999, down 25 percent from the previous quarter and down 41 percent from the fourth quarter of 1998. Total endorsements or insurance policies issued totaled 252,800, down 21 percent from the third quarter of 1999. Purchase endorsements were 225,900, down 16 percent from the third quarter but up from 268,700 or 14 percent from the fourth quarter of 1998. Endorsements for refinancings declined to 26,900 or 48 percent from the previous quarter and decreased 71 percent from the fourth quarter a year ago. In 1999 the annual number of total applications received was 1,407,000, down 10 percent from last year. Total endorsements were 1,246,400, up 12 percent, and the number of purchase endorsements was 949,500, up 19 percent. The annual refinancings were down 5 percent to 296,900.

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

PMI and VA Activity*

Private mortgage insurers issued 302,300 policies or certificates of insurance on conventional mortgage loans during the fourth quarter of 1999, down 20 percent from the third quarter and down 30 percent from the fourth quarter of 1998; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 61,300 single-family properties in the fourth quarter of 1999, down 40 percent from the previous quarter and down 42 percent from the fourth quarter of 1998. The annual data for 1999 shows that private mortgage insurers issued 1,455,400 certificates, down 1 percent from the previous year, and that the U.S. Department of Veterans Affairs' guaranties for mortgage loans at 441,600 were up 15 percent from 1998.

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

Delinquencies and Foreclosures

Total delinquencies were at 4.10 percent at the end of 1999's third quarter, down 1 percent from the second quarter of 1999 and down 6 percent from the third quarter of 1998. Ninety-day delinquencies were at 0.59 percent, unchanged from the second quarter of 1999 but down 3 percent from the same quarter a year ago. During the third quarter of 1999, 0.30 percent of loans entered foreclosures, unchanged from the second quarter but down 17 percent from the third quarter of the previous year.

Source: National Delinquency Survey, Mortgage Bankers Association