That Benchmark Mortgage Rate Typically Isn’t Offered
Abstract
Last week's news that mortgage rates topped 6% might have come as quite a surprise for many buyers, but not because the rate was so high. "If you have a really volatile rate-and mortgage-rate volatility is historically high right now-by the time the survey comes out it can be grossly inaccurate," said Todd Hanley, a Boca Raton, Fla.-based loan partner at CrossCountry Mortgage LLC. As their single largest monthly expense, the mortgage rate is something of an obsession for many homeowners, the topic of dinner-party gossip and fraught conversations with family members. Throughout 1972, for example, the 30-year mortgage rate held between 7.23% and 7.46%. Freddie Mac's longstanding methodology has been to survey lenders on Monday, Tuesday and Wednesday and report the average rate on Thursday, which works just fine in a calm market. Many industry professionals like Mr. Hanley prefer to check rates from Mortgage News Daily, an industry data provider, which publishes a daily mortgage rate every afternoon, based on data collected from lenders' rate sheets. On Thursday, Feb. 10, Freddie Mac reported an average mortgage rate of 3.69%. That same morning the government reported an unexpectedly high inflation rate. These lags make it appear that prices are higher and mortgage rates lower than what you might actually experience if you call a mortgage broker today to try to buy a house. Still, a prospective borrower is likely to be quoted a higher interest rate or have to pay quite a bit in fees or points to closing costs to get that rate.
