|**Secondary Market Report** | **December 1998**
|--------------------------- | -----------------



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



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`News Release
HUD No. 98-646                                                  FOR RELEASE:
L. Richard Keyser (202) 755-7500 x137                           December 30, 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 con-
struction funds.  The December 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 7.00 percent.  Typical prices for 
7.00 percent contract interest rate loans produced a national average secondary 
market yield of 7.02 percent.
  
        FHA secondary market yields were mixed. Changes in secondary market yields on 
the most frequently quoted Section 203(b) contract rate ranged from an increase of  
4 basis points in the Southeast region to an decrease of 8 basis points in the West.                       
                                      
        In the FHA primary mortgage market, the average FHA effective rate for all 
reported primary market quotes was 6.90 percent.  Lenders reported that the most 
frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" 
commitments was 7.00 percent with an average of 2 basis points and an effective 
interest rate of  7.00 percent.  Average basis points for the 7.00 percent primary 
rate were 13 basis points in the North Central and zero basis points in all other 
regions.

        The national average contract rates for commitments on conventional loans 
for new and existing homes in the primary mortgage market went down 2 basis points 
to 6.84 percent in new home loans, and down 1 basis point to 6.84 percent in existing 
home loans. 

        The proportion of HUD offices reporting an adequate supply of construction 
funds on December 1 was 100 percent for FHA and 100 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  
December 1 was 76 percent for low-priced homes, 67 percent for moderate-priced homes,  
and 61 percent for high-priced homes.

        On December 1 the proportion of HUD Field Offices reporting a stable trend in 
builders' unsold inventory of new homes was 74 percent, while 16 percent noted a 
declining trend and 10 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 81 percent, 
a declining trend 12 percent, and an advancing trend 7 percent.`

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Date of next release: January 26, 1999



`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: 1/12/99**