Housing Industry Expected To Remain Vibrant In 2002

McLean, VA – In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 7.14 percent, with an average 0.7 point, for the week ending March 22, 2002, up from 7.08 percent last week. Last year at this time, the 30-year FRM averaged 6.89 percent. This is the highest the 30-year has been since the first week of January when it was 7.14 percent.

The average for the 15-year FRM this week is 6.65 percent, with an average 0.7 point, also higher than last week's average of 6.59 percent. A year ago, the 15-year FRM averaged 6.44 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 5.11 percent this week, with an average 0.7 point, up from last week's average of 5.08 percent. This time last year, the one-year ARM averaged 6.22 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Housing starts in February rose to a three-year record high surprising most industry analysts," said Robert Van Order, Freddie Mac's chief international economist. "And that information supports the idea that the housing industry continues to prop up the overall economy as it makes a modest recovery from the recent short recession.

"Although February new home sales are expected to be higher, February existing home sales are predicted to be lower. Slightly higher mortgage rates in March, however, may cause all of the above to fall to lower levels. That said, the overall housing market will be weaker in 2002 than it was in 2001, but it will still be a very good year for housing."

Freddie Mac defines its regions as follows:

Northeast: NY, NJ, PA, DE, MD, DC, VA, WV, PR, ME, NH, VT, MA, RI, CT, VI
Southeast: NC, SC, TN, KY, GA, AL, FL, MS
North Central: OH, IN, IL, MI, WI, MN, IA, ND, SD
Southwest: TX, LA, NM, OK, AR, MO, KS, CO, NE, WY
West: CA, AZ, NV, OR, WA, UT, ID, MT, HI, AK, GU

Freddie Mac's Primary Mortgage Market Survey (PMMS) is for informational purposes only and Freddie Mac is not responsible for business decisions made based on the reported results of the PMMS. Freddie Mac may change the methodology used to conduct the PMMS survey at any time and without notice.

DEFINITIONS

Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.

ARM Index - One-year Treasury

Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.

Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.

Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.

Weighted Averages for the PMMS have been adjusted as of October 11, 2001. The new weights use the dollar volume of conventional mortgage originations within the 1-unit Freddie Mac loan limit as reported under the Home Mortgage Disclosure Act (HMDA) for 1999. The weights are listed in the table below.

Source: Freddie Mac

Published: March 22, 2002

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