The Federal Housing Finance Agency (FHFA) today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage (ARM) contracts, was 3.78 percent based on loans closed in May. Beginning in March, FHFA is calculating interest rates using unweighted survey data. There was a decrease of 0.15 percent from the previous month.

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 17 basis points to 4.04 in May. These rates are calculated from the  FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note).  These results reflect loans closed during the May 25 – 31 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-April.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.78 percent in May, down 15 basis points from 3.93 percent in April. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.91 percent in May, down 12 basis points from 3.91 percent in April.

This report contains no data on adjustable-rate mortgages due to insufficient sample size.  Initial fees and charges were 1.03 percent of the loan balance in May, up 13 basis points from April. Thirteen percent of the purchase-money mortgage loans originated in May were “no-point” mortgages, down eight percent from the share in April. The average term was 27.7 years in May, up 0.4 years from 27.3 years in April. The average loan-to-price ratio in May was 76.4 percent, up 1.1 percent from 75.3 percent in April. The average loan amount was $263,200 in May, up $7,000 from $256,200 in April.