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| **Secondary Market Report** | **May 1998****Secondary Market Prices and Yieldsand Interest Rates for Home LoansMay 1, 1998News ReleaseHUD No. 98-207                                                FOR RELEASE:L. Richard Keyser (202) 755-7500 x137                         June 2, 1998www.hud.gov/fha/comp/rpts/fharpts.html.text->HUD No. 98-207                                                                                FOR RELEASE(202) 708-0685                                                                     Tuesdayhttp://www.hud.gov/news.html        WASHINGTON - The U.S. Department of Housing and Urban Development today released the results of its latest survey of market conditions forfixed rate, long-term, level payment home loans as well as interest rates for home construction funds.  The May 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 7.25 percent.  Typical prices for 7.25 percent contract interest rate loans produced a national average secondary market yield of 7.37 percent.          The findings are obtained from a survey of home loan market condi-tions conducted by officials in 70 HUD Field Offices. Information is obtained from over 240 lending institutions and builders located in major metropolitan areas across the country.          FHA secondary market yields were up in all regions.  Changes in secondary market yields on the most frequently quoted Section 203(b) contract rate ranged from an increase of 9 basis points in the Southeast region to an increase of 30 basis points in the West.                                                                     In the FHA primary mortgage market, the average FHA effective rate for all reported primary market quotes was 7.37 percent.  Lenders reported that the most frequent rate being quoted to potential FHA homebuyers for 60 days or more "lock-in" commitments was 7.50 percent with an average of 31 basis points and an effective interest rate of 7.54 percent.  Average basis points for the 7.50 percent primary rate were, 125 basis points in the Middle Atlantic, zero basis points in the Southeast, 100 basis points in the North Central, zero basis points in the Southwest, and 8 basis pointsin the West.        The national average contract rates for commitments on conventional loans for new and existing homes in the primary mortgage market went up 4 basis points to 7.20 percent in new home loans, and up 4 basis points to 7.21 percent in existing home loans.         The proportion of HUD offices reporting an adequate supply of construction funds on May 1, was 96 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 May 1, was 70 percent for low-priced homes, 73 percent for moderate-priced homes,  and 71 percent for high-priced homes.        On May 1, the proportion of HUD Field Offices reporting a stable trend in builders' unsold inventory of new homes was 77 percent, while 21 percent noted a declining trend and 2 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 declininginventory of new homes indicates somewhat of a sellers' market, where demandwould be relatively stronger than supply.  One year ago the proportion of offices reporting a stationary trend was 83 percent, a declining trend 14 percent, and an advancing trend 3 percent.                                      #  #  #  #    Date of next release:  June 24, 1998                 ***HSG/FHA Home Page | Reports Menu | Email Us**
**Date Last Modified: 06/02/98***** |
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