On Tuesday, the Federal Housing Finance Agency released its latest FHFA Index, showing interest rates on conventional purchase-money mortgages on the rise between December 2017 and January 2018. The FHFA Index is comprised of several different indices, based on a small monthly survey of mortgage lenders. According to FHFA, the January 2018 values for the indices “are based on 2,885 reported loans from 14 lenders, which include savings associations, mortgage companies, commercial banks, and mutual savings banks.”
The first of the indices, the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index, was up 4 basis points over December’s 4.08 percent, coming in at 4.12 percent for loans closed in late January.
The average interest rate on all mortgage loans also increased, rising 5 basis points from 4.05 percent in December to 4.10 percent in January. The effective interest rate on all mortgage loans, which “accounts for the addition of initial fees and charges over the life of the mortgage,” rose 7 basis points, increasing from 4.09 in December to 4.16 percent in January.
The average interest rate on conventional, 30-year, fixed-rate mortgages of $453,100 or less was 4.19 percent. This represented a 2 basis-point increase from 4.17, the interest rate on similar mortgages of $424,100 or less in December.
FHFA reports that the average loan amount for all loans was $298,400 in January, down from $321,100 in December.
FHFA also announced that home prices rose 1.6 percent in Q4 2017, as tracked by FHFA’s House Price Index (HPI). This included year-over-year price increases in 49 of the 50 states and in each of the 100 largest metro areas. According to the HPI, house prices also saw a 6.7 percent increase year-over-year between Q4 2016 and Q4 2017. HPI data is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
Dr. Andrew Leventis, Deputy Chief Economist for FHFA, said, "Home price appreciation in the fourth quarter showed absolutely no letup throughout the U.S. As we begin to evaluate home prices in the first quarter, we will monitor whether new headwinds—higher mortgage rates and changes in tax laws—will lead to any moderation in the rate of house price growth."
The Seattle-Bellevue-Everett, Washington metropolitan statistical area (MSA) saw the largest annual price increase at 15.0 percent, while San Francisco-Redwood City-South San Francisco, California saw the smallest at 0.5 percent.