Taking advantage of the falling mortgage rates, homebuyers are looking at higher loan amounts according to data on mortgage rates in February released by the Federal Housing Finance Agency (FHFA). The report indicated that loan amounts in February increased month over month by $5,900 to $313,400.
However, apart from this indicator, the data reflected declining mortgage rates all around. The FHFA revealed that The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 4.46 percent for loans closed in late February, down 14 basis points from 4.6 percent in January.
Similarly, the average mortgage interest rate on all mortgage types was down 15 basis points to 4.5 percent compared with 4.65 percent in January. For conventional 30-year fixed-rate mortgages of $484,350 or less, the rate declined 11 basis points to 4.67 percent in February compared with 4.78 percent in the prior month.
FHFA said that the effective rate on all mortgages also fell 16 basis points to 4.6 percent in February compared with 4.76 percent in January. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage, the report indicated.
Rates have continued to decline in March as well with Freddie Mac's latest Primary Mortgage Market survey indicating that mortgage rates this week took the largest weekly drop of 22 basis points in a decade.
"The Federal Reserve’s concern about the prospects for slowing economic growth caused investor jitters to drive down mortgage rates by the largest amount in over ten years," said Sam Khater, Chief Economist, Freddie Mac. "Despite negative outlooks by some, the economy continues to churn out jobs, which is great for housing demand. We have recently seen home sales start to recover and with this week’s rate drop we expect a continued rise in purchase demand."
The 30-year fixed-rate mortgage rates declined to 4.06 percent during the week compared to 4.28 percent last week. The 15-year fixed-rate mortgage this week averaged 3.57 percent down 0.4 points from last week's 3.71 percent.