December 1998

Secondary Market Prices & Yields

and Interest Rates for Home Loans

● Secondary Market Prices/Yields/Interest Rates Press Release

● Net Prices and Average Yields

● Most Frequently Quoted Contract Rates and Yields

● Effective FHA Primary Rates

● FHA Primary Market Rates

● Average Interest Rates on Conventional First Mtgs

● Average Interest Rate for Home Construction Financing

● Trend of Builders' Plans Compared to Previous Month

● Unsold Inventory of New Homes Compared to Previous

Last revised: January 19, 1999

HUD Secondary Market Prices & Yields - December 1998

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Secondary Market Report December 1998

Secondary Market Prices and Yields

and Interest Rates for Home Loans

December 1, 1998

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 construction 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 

HUD Secondary Market Prices and Yields December 1998

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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.

# # # #

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

HUD Secondary Market Prices and Yields December 1998

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Secondary Market Report December 1998

TABLE 1

Net Prices and Average Yields for HUD-Insured

New Home Mortgages (Section 203) Immediate Delivery

Transactions 30-year Maturity - Minimum Downpayment

 7.00% 7.00% 

 Mortgages Mortgages 

 Dec'98 Nov'98 

 ------------------------ ------------------------

 Average Average Average Average 

 Price Yield 1/ Price Yield 1/ 

 ------- -------- ------- -------- 

Northeast $ 99.00 7.13% * *

Middle Atlantic $101.50 6.80% * *

Southeast $ 99.73 7.04% $100.00 7.00%

North Central $ 99.88 7.02% $ 99.72 7.04%

Southwest $100.00 7.00% $100.00 7.00%

West $ 99.53 7.06% $ 98.97 7.14%

 

United States $ 99.83 7.02% $ 99.47 7.07%

 

1/-Gross yield to investors, without allowance for

 servicing costs based on prepayment of the mortgage

 at the end of 12 years. 

 

* Dominant rate not quoted by respondents in region 

 

 United States 

 ---------------------------------------------

 Price Yield Mtg. Rate

 ---- $ ---- ---- % ---- ---- % ----

1984 High/Low 97.60/95.00 15.00/12.90 14.00/13.00

1985 High/Low 98.30/95.50 13.43/11.28 13.00/10.50

1986 High/Low 99.40/96.22 10.78/ 9.26 10.50/ 9.50

HUD Secondary Market Prices and Yields December 1998

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1987 High/Low 98.54/95.42 11.22/ 8.79 10.50/ 8.50

1988 High/Low 99.49/96.99 10.84/ 9.86 10.50/ 9.50

1989 High/Low 99.65/97.01 11.16/ 9.61 11.00/ 9.50

1990 High/Low 99.25/97.94 10.75/ 9.71 10.50/ 9.50

1991 High/Low 99.57/98.53 9.71/ 8.69 9.50/ 8.50

1992 High/Low 99.60/97.54 8.85/ 8.06 8.50/ 8.00

1993 High/Low 99.95/99.13 8.12/ 7.02 8.00/ 7.00

1994 High/Low 99.88/98.44 9.53/ 7.05 9.50/ 7.00 

1995 High/Low 99.97/99.18 9.54/ 7.51 9.50/ 7.50 

1996 High/Low 100.00/99.14 8.58/ 7.11 8.50/ 7.00 

1997 High/Low 99.91/99.20 8.56/ 7.51 8.50/ 7.50 

1998 High/Low 99.83/98.25 7.17/ 6.53 7.25/ 6.50 

Data as of: December 1, 1998 HQE: 12-21-98

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HUD Secondary Market Prices and Yields December 1998

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Secondary Market Report December 1998

TABLE 2

Most Frequently Quoted Contract Rates and Yields

for FHA Mortgages Sold in the Secondary Market

 

============================================================================================

 Contract Average Contract 

Average

 Year Rate Yield 1/ Year Rate Yield

1/

-------- -------- -------- --------- ------ 

--------

1993 Jan 8.00% 8.12% 1996 Jan 7.50% 7.52%

 Feb 8.00% 8.04% Feb 7.00% 7.11%

 Mar 7.50% 7.55% Mar 7.50% 7.57%

 Apr 7.50% 7.50% Apr 8.00% 8.09%

 May 7.50% 7.50% May 8.50% 8.52%

 Jun 7.50% 7.50% Jun 8.50% 8.57%

 Jul 7.50% 7.50% Jul 8.50% 8.55%

 Aug 7.50% 7.50% Aug 8.50% 8.56%

 Sep 7.00% 7.00% Sep 8.50% 8.58%

 Oct 7.00% 7.00% Oct 8.50% 8.56%

 Nov 7.00% 7.00% Nov 8.00% 8.00%

 Dec 7.50% 7.51% Dec 8.00% 8.14%

 

1994 Jan 7.50% 7.52% 1997 Jan 8.00% 8.06%

 Feb 7.00% 7.00% Feb 8.00% 8.06%

 Mar 7.50% 7.50% Mar 8.00% 8.08%

 Apr 8.50% 8.50% Apr 8.50% 8.55%

 May 8.50% 8.50% May 8.50% 8.56%

 Jun 8.50% 8.50% Jun 8.00% 8.05%

 Jul 9.00% 9.00% Jul 8.00% 8.02%

 Aug 8.50% 8.50% Aug 7.50% 7.61%

 Sep 2/ 8.50% 8.50% Sep 8.00% 8.02%

 Sep 2/ 9.00% 9.03% Oct 7.50% 7.52%

 Oct 9.00% 9.10% Nov 7.50% 7.53%

 Nov 9.00% 9.23% Dec 7.50% 7.51%

 Dec 9.50% 9.53% 

 

1995 Jan 9.50% 9.54% 1998 Jan 7.00% 7.17%

 Feb 9.00% 9.10% Feb 7.00% 7.08%

 Mar 9.00% 9.05% Mar 7.00% 7.06%

 Apr 8.50% 8.60% Apr 7.00% 7.09%

 May 8.50% 0.00% May 7.25% 7.37%

 Jun 8.00% 8.03% Jun 7.00% 7.07%

HUD Secondary Market Prices and Yields December

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 Jul 8.00% 8.00% Jul 7.00% 7.07%

 Aug 8.00% 8.09% Aug 7.00% 7.05%

 Sep 8.00% 8.03% Sep 7.00% 7.03%

 Oct 8.00% 8.03% Oct 6.50% 6.53%

 Nov 7.50% 7.61% Nov 7.00% 7.07%

 Dec 7.50% 7.51% Dec 7.00% 7.02%

1/-Gross yield to investors, without allowance for servicing costs 

 based on prepayment of the mortgage at the end of 12 years. 

2/-The September 1, 1994 survey found two rates reported with equal 

 frequency, evenly balanced between 8.50 and 9.00 percent. 

 Data as of: December 1, 1998 HQE: 

12-21-98

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Secondary Market Report December 1998

TABLE 3

Effective FHA Primary Rates

 

 

 "Dominant" Contract Rate 

 ------ ------ ------ 

 Dec'98 Nov'98 Dec'97

 

 United States 7.00% 7.00% 7.50%

 

 Average Points 

 ---------------------- 

 Northeast 0.00 0.00 0.42 

 Middle Atlantic 0.00 * 0.00 

 Southeast 0.00 0.17 0.04 

 North Central 0.13 0.33 0.00 

 Southwest 0.00 0.50 0.00 

 West 0.00 0.19 0.21 

 

 United States 0.02 0.30 0.11 

 

 Effective Rate 

 ---------------------- 

 Northeast 7.00% 7.00% 7.56%

 Middle Atlantic 7.00% * 7.50%

 Southeast 7.00% 7.02% 7.51%

 North Central 7.02% 7.04% 7.50%

 Southwest 7.00% 7.07% 7.50%

 West 7.00% 7.03% 7.53%

 

 United States 7.00% 7.04% 7.51%

 ------ ------ ------

 

HUD Secondary Market Prices and Yields December 1998

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Data as of: December 1, 1998 HQE: 12-21-98

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Date Last Modified: 1/12/99 

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Secondary Market Report December 1998

TABLE 4

FHA Primary Market Rates

 

 Dec 1, 1998 

 Percentage of 

 Field Offices Contract Average Effective

 Reporting Rate Points Rate

 ------------- -------- ------- ---------

Most Active Quote 39% 7.00% 0.02 7.00%

Second Most Popular Quote 16% 6.75% 0.50 6.82%

Third Most Popular Quote 13% 6.50% 0.11 6.51%

All Others 32% N/A N/A N/A

 

U.S. Average Rate 100% 6.86% 0.31 6.90%

 Nov 1, 1998 

 Percentage of 

 Field Offices Contract Average Effective

 Reporting Rate Points Rate

 ------------- -------- ------- ---------

Most Active Quote 40% 7.00% 0.30 7.04%

Second Most Popular Quote 15% 6.50% 0.39 6.55%

Third Most Popular Quote 13% 6.75% 0.33 6.79%

All Others 32% N/A N/A N/A

 

U.S. Average Rate 100% 6.90% 0.32 6.94%

 Oct 1, 1998 

 Percentage of 

HUD Secondary Market Prices and Yields December 1998

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 Field Offices Contract Average Effective

 Reporting Rate Points Rate

 ------------- -------- ------- ---------

Most Active Quote 49% 6.50% 0.06 6.51%

Second Most Popular Quote 16% 7.00% 0.06 7.01%

Third Most Popular Quote 15% 6.75% 0.38 6.80%

All Others 20% N/A N/A N/A

 

U.S. Average Rate 100% 6.67% 0.25 6.70%

Data as of: December 1, 1998 HQE:

12-21-98

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HUD Secondary Market Prices and Yields December 1998

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Secondary Market Report December 1998

TABLE 5

Average Interest Rates on Conventional First Mortgages

 New Home Loans Existing Home Loans 

 ------------------------ ------------------------

 Dec'98 Nov'98 Dec'97 Dec'98 Nov'98 Dec'97

 ------ ------ ------ ------ ------ ------

Northeast 6.94% 6.83% 7.75% 6.94% 6.83% 7.75%

Middle Atlantic 6.89% 7.02% 7.16% 6.89% 7.02% 7.16%

Southeast 6.85% 6.80% 7.43% 6.85% 6.80% 7.43%

North Central 6.86% 6.89% 7.60% 6.84% 6.89% 7.59%

Southwest 6.80% 6.88% 7.58% 6.80% 6.82% 7.60%

West 6.80% 6.83% 7.34% 6.81% 6.83% 7.36%

 

United States 6.84% 6.86% 7.48% 6.84% 6.85% 7.48%

 United States Average 

 ---------------------------------- 

 New Existing 

 Home Loans Home Loans 

 ----------- ---------- 

1984 High/Low 14.65/13.20 14.67/13.21 

1985 High/Low 13.26/11.56 13.28/11.58 

1986 High/Low 11.03/ 9.47 11.03/ 9.47 

1987 High/Low 10.84/ 9.04 10.87/ 9.04 

1988 High/Low 10.55/ 9.80 10.56/ 9.81 

1989 High/Low 10.93/ 9.70 10.95/ 9.69 

1990 High/Low 10.46/ 9.75 10.48/ 9.76 

1991 High/Low 9.66/ 8.67 9.65/ 8.66 

1992 High/Low 8.91/ 7.95 8.92/ 7.95 

1993 High/Low 8.19/ 6.89 8.19/ 6.89 

1994 High/Low 9.34/ 7.13 9.34/ 7.13 

1995 High/Low 9.32/ 7.46 9.33/ 7.46 

1996 High/Low 8.67/ 7.73 8.65/ 7.73 

1997 High/Low 8.25/ 7.38 8.25/ 7.39 

1998 High/Low 7.25/ 6.64 7.23/ 6.65 

Data as of: December 1, 1998 HQE: 12-21-98

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HUD Secondary Market Prices and Yields December 1998

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Secondary Market Report December 1998

TABLE 6

Average Interest Rate for Home Construction Financing

 HUD/FHA * CONVENTIONAL 

 ------ ------ ------- ------ ------ 

-------

 Dec'98 Nov'98 Dec '97 Dec'98 Nov'98 Dec

'97

 ------ ------ ------- ------ ------ 

-------

Northeast 8.25% 8.25% 8.45% 7.58% 8.58% 

8.45%

Middle Atlantic 7.54% 7.47% 7.96% 7.48% 7.24% 

8.16%

Southeast 8.36% 8.98% 8.77% 8.31% 8.90% 

8.94%

North Central 7.66% 7.99% 8.07% 7.72% 7.77% 

8.03%

Southwest 8.08% 7.83% 8.88% 7.71% 8.21% 

8.66%

West 7.70% 8.19% 8.76% 7.80% 8.73% 

8.72%

 

United States 7.86% 8.14% 8.49% 7.82% 8.32% 

8.52%

 

* Type of financing planned for permanent loans. 

*******************************************************************************************

TABLE 7

National Percent of HUD Offices Reporting Adequate

Construction Funds Available for Homes

 

 Dec'98 Nov'98 Dec'97

 ---------------- ---------------- 

----------------

FHA-Insured 100% 98% 100%

HUD Secondary Market Prices and Yields December 1998

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Conventional 100% 98% 100%

 

 

These data are not based on actual transactions. They are 

compiled from the best information available to HUD Field

Offices throughout the US. 

Data as of: December 1, 1998 HQE: 12-21-98

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Secondary Market Report December 1998

TABLE 8

Trend of Builder's Plans Compared to Previous Month

by Housing Price Category

(Percent of Field Offices Reporting)

 Dec 1998 Dec 1997 

 -------------------- -------------------

 ------ Trend ------- ------ Trend ------ 

 Down Stable Up Down Stable Up

 ---- ------ --- ---- ------ ---

Low-Priced 13% 76% 11% 8% 78% 14%

Mod-Priced 4% 67% 29% 3% 72% 25%

High-priced 9% 61% 30% 7% 72% 21%

All 6% 74% 20% 3% 77% 20%

 Nov 1998 Nov 1997 

 -------------------- -------------------

 ------ Trend ------- ------ Trend ------ 

 Down Stable Up Down Stable Up

 ---- ------ --- ---- ------ ---

Low-Priced 4% 76% 20% 9% 79% 12%

Mod-Priced 2% 64% 33% 3% 71% 26%

High-priced 4% 60% 36% 5% 72% 23%

All 2% 75% 23% 3% 78% 19%

 Oct 1998 Oct 1997 

 -------------------- -------------------

 ------ Trend ------- ------ Trend ------ 

 Down Stable Up Down Stable Up

 ---- ------ --- ---- ------ ---

Low-Priced 17% 70% 13% 9% 82% 9%

Mod-Priced 4% 79% 17% 5% 69% 26%

High-priced 4% 74% 22% 7% 71% 22%

All 2% 81% 17% 4% 79% 17%

 

HUD Secondary Market Prices and Yields December 1998

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PERCENTAGE POINT DIFFERENCE 

 OCT 1998 - DEC 1998 OCT 1997 - DEC 1997 

 -------------------- --------------------

 ------ Trend ------- ------ Trend ------- 

 Down Stable Up Down Stable Up

 ---- ------ --- ---- ------ --- 

Low-Priced -4% 6% -2% -1% -4% 5%

Mod-Priced 0% -12% 12% -2% 3% -1%

High-priced 6% -13% 7% 0% 1% -1%

All 4% -8% 4% -1% -2% 3%

Data as of: December 1, 1998 HQE: 12-21-98

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Secondary Market Report December 1998

TABLE 9

Unsold Inventory of New Homes Compared

to Previous Month

(Percent of Field Offices Reporting)

 

 Dec'98 Dec'97

 ------ ------

 Declining 16% 12%

 Stationary 74% 81%

 Advancing 10% 7%

 

 Total 100% 100%

 

 Nov'98 Nov'97

 ------ ------

 Declining 14% 13%

 Stationary 75% 78%

 Advancing 11% 9%

 

 Total 100% 100%

 Oct'98 Oct'97

 ------ ------

 Declining 17% 14%

 Stationary 74% 79%

 Advancing 9% 7%

 

 Total 100% 100%

 

 Percentage Point Difference 

 

 Oct'98- Oct'97-

 Dec'98 Dec'97

 ------- -------

 Declining -1% -2%

HUD Secondary Market Prices and Yields December 1998

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 Stationary 0% 2%

 Advancing 1% 0%

 

 

Data as of: December 1, 1998 HQE: 12-21-98

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