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New Home Loan Rates Keep Going Up
BUILDER / October 30, 2013
In September, interest rates on conventional mortgages used to purchase newly built homes increased for the fourth month in a row, according to data released today by the Federal Housing Finance Agency (FHFA).
During the month, the average contract interest rate increased by 10 basis points to 4.30 percent, while initial fees increased to 1.14 percent (from an average of 1.06 percent the previous month). The combination drove FHFA’s key measure of the average effective interest rate on new home loans (which amortizes the initial fees and incorporates them into the rate) up by 11 basis points to 4.44 percent—the highest it’s been since July of 2011 (the month prior to a substantial 36 basis point drop).
The FHFA release also includes data on loan size and house prices, and the averages on both for newly built homes declined in September. The average price of a new home purchased with a conventional mortgage declined by $11,900 to $388,500. (The average price depends on the mix of new homes purchased with conventional loans during a particular month, in addition to anything that may be happening to house prices in general.) The average amount of the loans showed an even more pronounced decline of $13,500, taking it down to $294,800.