|**Secondary Market Report** | **October 1998**
|--------------------------- | ----------------



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Secondary Market Prices and Yields
and Interest Rates for Home Loans
October 1, 1998



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`News Release
HUD No. 98-580                                                  FOR RELEASE:
L. Richard Keyser (202) 755-7500 x137                           October 28, 1998
www.hud.gov/fha/comp/rpts/fharpts.html.`



`WASHINGTON - The U.S. Department of Housing and Urban Development today 
released the results of its latest survey of market conditions for fixed rate, 
long-term, level payment home loans as well as interest rates for home construction 
funds.  The October 1, 1998, survey found that the most frequently quoted contract 
rate for HUD/FHA Section 203(b) mortgages being sold in the secondary market for 
immediate delivery was 6.50 percent.  Typical prices for 6.50 percent contract 
interest rate loans produced a national average secondary market yield of 6.53 percent.
  
        FHA secondary market yields were down in all regions.  Changes in secondary 
market yields on the most frequently quoted Section 203(b) contract rate ranged from 
a decrease of 48 basis points in the Middle Atlantic region to a decrease of  52 basis 
points in the West.         
                                                    
        In the FHA primary mortgage market, the average FHA effective rate for all 
reported primary market quotes was 6.70 percent.  Lenders reported that the most 
frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" 
commitments was 6.50 percent with an average of 6 basis points and an effective 
interest rate of  6.51 percent.  Average basis points for the 6.50 percent primary 
rate were, zero basis points in the Middle Atlantic, 8 basis points in the Southeast, 
zero basis points in the North Central, zero basis points in the Southwest, and 
14 basis points in the West.

        The national average contract rates for commitments on conventional loans 
for new and existing homes in the primary mortgage market went down 22 basis points 
to 6.64 percent in new home loans, and down 27 basis points to 6.65 percent in 
existing home loans. 

        The proportion of HUD offices reporting an adequate supply of construction 
funds on October 1, was 92 percent for FHA and 96 percent for conventional financings.

        For the trend of builders' plans, in the latest survey the majority of 
builders remained in the stable building plan category for each home price class.  
The proportion on  October 1, was 70 percent for low-priced homes, 79 percent for 
moderate-priced homes,  and 74 percent for high-priced homes.

        On October 1, the proportion of HUD Field Offices reporting a stable trend in 
builders' unsold inventory of new homes was 74 percent, while 17 percent noted a 
declining trend and 9 percent an advancing situation.  An advancing trend is indicative 
of a growing inventory of  homes, meaning either over-production and/or slower new 
home sales.  Conversely, a declining inventory of new homes indicates somewhat of a 
sellers' market, where demand would be relatively stronger than supply.  One year ago 
the proportion of offices reporting a stationary trend was 79 percent, a declining 
trend 14 percent, and an advancing trend 7 percent.`

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Date of next release: November 24, 1998



`The entire news release and all tables are now available on the Web:
 http://www.hud.gov/fha/comp/rpts/fharpts.html.`

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Date Last Modified: 10/29/98**