A Note about the weekly Freddie Mac Rate Survey

Trypically, every Thursday, Freddie Mac releases their weekly survey stating the national average of mortgage rates with their Primary Mortgage Market Survey (“PMMS”) press release.

Most of the news media forget to mention 3 important points:

First, that the average they were quoting required about 3/4 of a point extra in fees for a buy-down to get that rate.

Second, the survey is broken down by region and the NorthEast was actually a drop higher than the national average.

Third, most if not all releases often omit important stats or caveats that get the rates to appear very low. Not all applicants can qualify for these rates. The rates are tied into specific loan-to-value and credit score benchmarks.

On average every 1/2 point (.50%) fee that a person pays extra to buy-down the rate will save them 1/8 (.125%) in the interest rate. So the real rate according to this is 4.75% with approximately a 1/4 point (.25%) extra in fee for that rate. [Note: A "point" represents 1% of the Loan Amount; ie $3,000 on a $300,000 mortgage]. 
Ever since the Government took over Fannie and Freddie, these weekly announcements by Freddie Mac are becoming more and more public media campaigns than anything else. 
What’s worse, is that many banks are not passing on the full benefit to mortgage bankers or brokers, because they are either at capital capacity and want to slow down business, or because they are building in a small “margin” to help offset their run-off of loans that they have on their books (portfolios) that they are losing to refinancing.

That said, at the end of the day — rates are definitely at historical levels!

As a participan of that survey Approved Funding knows the details and the ‘devils behind the details’ of those numbers. Please contact us for specific scenarios and analysis that can help you make the best, and most timely decision about your mortgage loan.