First Time Home Buyers
Small changes in mortgage rates can mean big changes. Just a 0.25% means $45/month on a $300,000 home. Even bigger, it means over $16,000 of more or less total interest over the life of the loan.
The problem is that the “news” increasingly likes to cover a report that is outdated before it is even released! Here are a few headlines from Friday:
- US Mortgage Rates Drop For 2nd Straight Week (Reuters)
- Mortgage Rates On 30-year US Loans Fall To 4.93% (Business Week)
- 30-Year Fixed Mortgage Rate Falls Farther Below 5% (Marketwatch)
For those of you that read the blog, last week was the worst week since late-2009. Yet, Reuters, BusinessWeek, and MarketWatch were reporting lower rates on Friday AFTER the sell-off.
The source of this data is the Freddie Mac Primary Mortgage Market Survey (PMMS). It is an industry survey that dates back to 1971. It is a great survey, but it has a horrible flaw in its methodology.
While mortgage rates change throughout the day, Freddie Mac surveys over 100 lenders who independently choose a time on Monday, Tuesday, or Wednesday morning to report their rates. They publish the data Thursday and the media “breaks the news” on Friday. Last week’s entire sell-off occurred after the close of the survey and before the news was released.
As an aside, I love the PMMS archives. You can see 40 year histories. You can see historical 30 Year v 5/1 ARM spreads. It is a great archive. It is not a news source.
As a consumer, you need to know the rate right now. Freddie Mac’s PMMS can’t do that.
If you need a real time update to rates rather than last Tuesday’s news, hit the chat button and we’ll tell you current mortgage rates.
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