© 2022 Freddie Mac www.freddiemac.com

Economic & Housing Research Note

NOVEMBER 2022

1 For more background see Freddie Mac’s Mortgage Rate Survey Explained - Freddie Mac.

Freddie Mac’s Newly Enhanced

Mortgage Rate Survey Explained

Launched November 17, 2022

For decades, the mortgage industry has relied on Freddie Mac’s Primary Mortgage Market 

Survey® (PMMS) as the industry standard for mortgage interest rates in the United States. 

Throughout the history of the PMMS, we have adjusted the methodology to account for changes 

in technology and the mortgage industry while maintaining continuity with historical rates. 

In order to ensure that the PMMS continues to provide high-quality information on the mortgage 

market, we are making new enhancements to our methodology. 

In this Research Note, we provide details of the adjustments 

and explain how the changes may impact users of the PMMS. 

We also discuss how the adjustments in methodology would 

have impacted historical PMMS results had we implemented 

these changes at an earlier date. While the methodological 

changes will set up the PMMS for continued success in years 

to come, the total impact on rates is currently very small, as 

we document below.

Background on the PMMS

Freddie Mac has been surveying lenders on weekly mortgage 

rates since 1971.1

 The survey included discount points and 

origination fees for 30-year and 15-year fixed-rate and 5/1 

hybrid amortizing adjustable-rate mortgage products. 

The survey captures mortgage rates for first-lien, conventional, conforming, purchase mortgages with 

a borrower who has a loan-to-value of 80% and excellent credit. In addition, it captures adjustable-rate 

mortgage (ARM) rates indexed to U.S. Treasury yields. The lenders surveyed are asked for both the initial 

coupon rate and points as well as the margin on the ARM products. The lenders represent a mix of business 

models— credit unions, commercial banks, and mortgage lending companies—roughly proportional to 

the level of mortgage business each type commands nationwide. The rates are collected from Monday 

through Wednesday, and the results are released on Thursdays at 10 a.m. Eastern Time (ET). 
Economic & Housing Research Note | November 2022 2

Enhancement of Freddie Mac’s mortgage rate survey

There have been growing challenges with the traditional survey approach. The current survey operates 

on sampled data where a subset of records in the overall population is selected. As the underlying 

population changes in response to economic conditions and the evolution of the mortgage market, 

the survey faces a variety of issues that could result in statistical bias and eventually reduce the reliability 

of the results. 

While our survey carefully samples lenders covering a broad range of lender types to reflect the 

U.S. mortgage market, we had to make frequent adjustments to our selection process to reflect changes 

in the housing market. The entry and exit of new participants 

into and out of the mortgage market creates more complexity in 

accurately tracking the market with a traditional survey method. 

Many institutions have turned to administrative datasets to 

supplement or replace survey methods. Administrative datasets 

are data collected by governments or other organizations for 

non-statistical reasons to provide overviews on registration, 

transactions, and record keeping. To enhance the PMMS, we 

have also decided to turn to administrative data, leveraging 

Freddie Mac’s vast data resources to estimate weekly mortgage 

rates. For the long-run viability of the PMMS, Freddie Mac has 

enhanced the PMMS methodology to improve the quality—as 

well as reliability and consistency—of its results. 

Leveraging loan application data

Going forward, the traditional survey approach will be replaced with loan application information 

submitted to Freddie Mac’s automated underwriting system, Loan Product Advisor®

 (LPA). 

LPA helps simplify the origination processes and provides lenders with greater certainty of meeting 

Freddie Mac’s eligibility requirements. 

The loan application data is extensive and contains various information about the property being 

considered for purchase, the borrower’s financial situation, employment history, and more. 

In general, mortgage rates are determined by a combination of various factors such as current 

economic conditions, the lender’s risk appetite and overhead costs, and borrowers’ credit profiles. 

However, the application data is neither a pledge by the applicant nor a commitment by the lender. 

There are many advantages of using loan application data instead of a survey, including the dramatic 

increases in coverage and a real-time view of the mortgage market. The loan application data also covers 

a broad range of lenders and geographies in the United States and immediately and automatically 

adjusts to shifts in the composition of the mortgage market. While the current PMMS in recent years has 

captured mortgage rates reported by lenders in a majority of states, the loan application covers lenders 

in all 50 states, plus the District of Columbia, on a weekly basis.

For the long-run viability 

of the PMMS, Freddie Mac 

has enhanced the PMMS 

methodology to improve the 

quality—as well as reliability 

and consistency—of its results.
Economic & Housing Research Note | November 2022 3

Limitations of the loan application data

Although there are many advantages of using loan application data to measure the mortgage rate, 

it comes with a cost. First, we do not have the information on the mortgage rate when lenders do not 

intend to sell to the secondary market or if they do not use the LPA as the underwriting tool. 

As noted above, we measure the mortgage rate not in the origination but in the application stage. 

Therefore, our reported rate does not represent the rate at the time of loan origination. Not all 

applications will necessarily be approved and result in originated loans. Users should be aware of 

these factors when using the PMMS. 

In addition, using LPA will result in two major changes related to our PMMS output: 

1. We will no longer report interest rates, margin, or discount points and fees for the hybrid 

5/1 Treasury Indexed Adjustable-Rate Mortgage (ARM).

2. We will no longer report average discount points and origination fees for the 30-year and 

the 15-year fixed-rate mortgage (FRM).

We will not include the ARM products rate due to insufficient numbers of applicants with ARM 

programs in recent years in LPA data. 

The cessation of reporting average points and fees merits some further discussion. Since LPA does not 

capture discount points or origination fees, we are not able to report them in the PMMS going forward. 

The full cost of a mortgage is captured by both the interest rate and the discount points and origination 

fees paid by a borrower. Theoretically, a borrower who pays discount points would receive a lower rate 

compared to the rate they would receive if they paid no points. However, in practice, we have found 

that in recent years the difference in rate between a borrower paying discount points and borrowers 

who do not pay discount points has been very near to zero. 

Consider Exhibit 1. We analyzed loans funded by Freddie Mac where the loan meets the PMMS profile 

and the closing date was between 2018 and 2021—then segmented the data into two sets: (1) borrowers 

who purchased discount points and (2) borrowers who did not purchase discount points. We found 

that for purchase transactions, 

mortgage rates are nearly the 

same regardless of whether 

borrowers purchased discount 

points. We found similar 

outcomes in refinance and cashout refinance, where average 

mortgage rates did not change 

regardless of whether borrowers 

purchased discount points.2

2 We also sampled closed loans from the HMDA 2021 dataset. We found similar results as what is displayed in Exhibit 1, showing that mortgage rates tend to 

stay consistent regardless of whether borrowers purchased discount points. 

EXHIBIT 1

Prime borrowers’ average mortgage rate with discount points 

vs. no discount points

2018 2019 2020 2021

Borrower paid points 4.66 4.05 3.09 2.99

Borrower did not pay points 4.70 4.08 3.08 3.02

Note: Data are from Freddie Mac funded loans of prime borrowers with 30-year fixed rate mortgage. 

Points refer to discount points paid by the borrower.
Economic & Housing Research Note | November 2022 4

Methodology

Our main goal is to capture the average interest rate from loan applications submitted to Freddie 

Mac’s LPA tool. In order to align with the historical PMMS approach, we will limit the selection of loan 

applications to conventional, conforming, fully amortizing home purchase loans for borrowers who put 

20% down and have excellent credit. 

At first, we collect all purchase loan applications that could result in future home purchases. 

Next, we clean the data by removing irrelevant, corrupted, incorrectly formatted, and incomplete 

data. Then, we deduplicate the transactions to extract the most recent submissions after eliminating 

the transactions with outliers. 

Then, we select the loan applications meeting the following criteria:

ł Single Family (SF) Loan – A mortgage loan secured by a property that contains one to four 

residential dwelling units.

ł Owner Occupied (OO) – A property in which at least one unit is occupied by an individual with 

an ownership interest. 

ł Conventional – A mortgage or loan that is not offered or secured by a government entity. 

It is available through private lenders, such as banks, credit unions, and mortgage companies.

ł 30-year or 15-year fixed rate mortgage – A loan that will be paid off completely in 30 or 15 

years, respectively, for which the interest rate stays the same for as long as the borrower keeps 

the mortgage.

ł A single-unit property – A property containing only one dwelling unit. 

ł Origination Loan-to-Value ratio – LTV greater than or equal to 75 and less than or equal to 80. 

ł Origination FICO score – 740 or above.

ł Conforming Loan – A mortgage with terms and conditions that meet the underwriting guidelines 

of the GSE (government-sponsored enterprises). To be consistent, we exclude loans with a higher 

loan amount than the national conforming loan limits ($647,200 in 2022).

ł Property is within the lower 48 contiguous states or the District of Columbia (excludes Alaska, 

Hawaii, and U.S. territories3

)

We selected these loan features to maximize the compatibility between our new approach 

and the historical survey-based PMMS.

Lastly, we applied several additional rules to calculate the timely mortgage rate. In LPA, a lender may 

submit the same application multiple times in the loan application stage. Therefore, in our final selection, 

we keep only the existing applicants when their rates have changed compared to prior submissions, 

while we include all new applicants. By selecting only new applicants and existing applicants only if their 

rate change, we ensure our measure represents the most recent rate in the current mortgage market.

3 Alaska, Hawaii, the U.S. territories of Guam and the U.S. Virgin Islands have special statutory provisions that provide higher national loan limits 

than those in the lower contiguous 48 states and the District of Columbia. 
Economic & Housing Research Note | November 2022 5

Specifically, we:

ł Filter LPA records to include only the purchase applications that could result in new 

home applications. 

ł Create weekly application measures by aggregating applications from Thursday prior 

to the current week through Wednesday.

ł Set the first week of 2005 as the initial period, calculating the weekly rate. We provide 

the historical series of the PMMS under our new methodology back to 2005 to enable users 

to perform time series analysis. 

ł Focus on the mortgage rate based on the latest submission for any loan application during 

the week. Our approach differs from collecting the mortgage rate based on the rate set date, 

which includes only the loan applications when the rates are locked.

PMMS calendar 

Going forward, the PMMS will be published weekly each Thursday at 12 p.m. ET. When a U.S. holiday 

falls on a Thursday, the PMMS will publish on the Wednesday of that week. 

The week of application activity starts at 12:00 a.m. ET the Thursday of last week and goes through 11:59 

p.m. ET the following Wednesday. We collect the mortgage rate of all purchase applications that meet 

our weekly criteria and calculate the average mortgage rate. 

EXHIBIT 2

PMMS calendar

Week 1

Sunday Monday Tuesday Wednesday Thursday

Collection starts

Friday Saturday

Week 2

Sunday Monday Tuesday Wednesday

Collection ends

Thursday

Published at 12 p.m.

Friday Saturday
Economic & Housing Research Note | November 2022 6

Comparing the new methodology to historical PMMS and external measures

In preparation for launching the newly enhanced PMMS, we created a complete weekly time series 

dating back to January 2005, when the loan application data collected from LPA was considered reliable 

for PMMS purposes. As we applied the same filters to the historical data as to the real-time data, the 

weekly releases are aligned with the same data-generation process as the historical series. This allowed 

us to construct a time series of weekly rates that would have been published if the new methodology 

had been applied historically in real-time. 

We find that the new methodology based on loan applications tracks very closely with our historical 

survey approach. On average, the difference between the traditional survey approach and the new 

approach for the 30-year FRM rate is about 0.066 percentage points from 2005 through 2021, with a 

standard deviation of about 0.074 percentage points. See Exhibit 3 below.

EXHIBIT 3

Enhanced PMMS vs. Legacy PMMS (30-YR FRM)

Enhanced PMMS Legacy PMMS

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Economic & Housing Research Note | November 2022 7

We conducted a similar experiment for the 15-year FRM; see Exhibit 4 below. On average, the 

difference between the traditional survey approach and the new approach for the 15-year FRM rate 

is about 0.0475 percentage points from 2005 through 2021, with a standard deviation of about 

0.069 percentage points. 

EXHIBIT 4

Enhanced PMMS vs. Legacy PMMS (15-YR FRM)

The very small difference in the rates reported in our 

historical survey and the real-time estimate of the new 

LPA-based approach give us great confidence in using the 

new approach. We also tested our results with other loan 

datasets purchased from third parties applying the same 

PMMS filters. The average rate computed using the new 

PMMS methodology and in the third-party data filtered to 

match the PMMS were quite similar. Finally, we assessed 

the results with the closed loans funded by Freddie Mac 

collected from the Uniform Closing Dataset after applying 

the same PMMS filters and we received comparable results. 

Enhanced PMMS Legacy PMMS

2.0

2.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

The very small difference in the 

rates reported in our historical 

survey and the real-time estimate 

of the new LPA-based approach 

give us great confidence in 

using the new approach.
Economic & Housing Research Note | November 2022 8

Conclusion

By using comprehensive and timely loan application data, 

our enhanced PMMS will produce a more reliable and accurate 

mortgage rate. Instead of surveying lenders, the weekly mortgage 

rate will be based on thousands of applications submitted to 

Freddie Mac from lenders across the country. We believe this 

improved PMMS will reflect the broader market and be able to 

monitor the real-time mortgage rate more closely.

PMMS users interested in time series properties using the new 

methodology are encouraged to submit this form to receive a 

file containing the historical real-time estimates displayed in 

Exhibits 3 and 4 above.

PMMS data users with questions about the methodological change are encouraged to reach out to us at 

chief_economist@freddiemac.com. 

We believe this improved PMMS 

will reflect the broader market 

and be able to monitor the realtime mortgage rate closely.
Economic & Housing Research Note | November 2022 9

Prepared by the Economic & Housing Research group

Sam Khater, Chief Economist

Len Kiefer, Deputy Chief Economist

Mihwa Kim, Macro Housing Economics Director

www.freddiemac.com/research

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