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Answer: It depends.
Given the volume of spam in your inbox about mortgage approvals, historically low rates, etc etc, marketing folks know that consumers are looking, and looking frequently, for good information about mortgage rates. But what’s available on the internet is often just advertisement. Real info is often outdated to the degree of being useless.
And when rates expire every 2.29 hours, outdated means inaccurate and irrelevant.
Inside The Freddie Mac Primary Mortgage Market Survey
The Federal Home Loan Mortgage Corporation (aka, Freddie Mac) conducts a weekly survey of mortgage rates, and publishes them every Thursday. It is for conforming loans only; not Jumbo, FHA, VA or even High Balance Conforming loans. The survey results have a pretty broad reach, and you’ll often see their numbers referenced in high visibility consumer press like the Wall Street Journal, USA Today, and MarketWatch.
And from my conversations with Bay Area Mortgage clients, I also know these survey results are used as a reference point when we’re discussing loan pricing.
Most of the time the survey is pretty darn close to what I see on the front lines. Pretty darn close doesn’t always sit well with a consumer, but it’s an easy enough conversation to have. Sometimes though, they really blow it, and that makes for a more defensive, trust-undermining conversation. It’s not as much fun to be painted into Freddie’s corner. It’s kind of scary.
The Freddie Mac rate survey gets compiled through a sampling that runs from Monday through Wednesday each week, and then gets released on Thursday morning. Take a look at last weeks survey. Released on February 4, the data covers Feb 1, 2, and 3.
The average rate indicated is 4.81%, and average points are 0.8%. Last week, the rate was 4.80%, points at 0.7%. So what this tells us is the average 30 year fixed rate mortgage went up 0.01%, and points went up 0.10%. That’s not too big of a deal.
The problem is, this doesn’t accurately reflect what happened. And if you were a consumer shopping for a home loan, you probably noticed.
Freddie Mac Accuracy Compared To Real Live Rate Quotes
From Monday through Wednesday, the sample days of the survey, I show 4.750% costing .6% points at the lowest, and 1.0% points at the highest. So, an average cost of 0.8 points, roughly, just like the Freddie Mac survey, but the rate was .125% cheaper than the report.
Here’s where it gets interesting. Thursday, when the news was released by Freddie Mac, 4.750% had moved up to 1.375% points. And by Friday, about the time most people have caught up to the news release, 4.750% was costing 1.625% points.
So from week to week, Freddie Mac showed almost zero movement at all. This is the message conveyed by their survey, and the accompanying news release. Realistically, a consumer floating their rate during that week was looking at about 1.0% higher in fees for the same rate they saw a week earlier.
That is by no stretch an insignificant amount. When reality is that far from what the consumer reads in the news, it makes for unpleasant conversations with their mortgage broker.
It doesn’t always work this way. Sometimes, the report is right on the money. Sometimes, it works the other way, setting consumers up for a pleasant surprise when they get updated quotes from their lender. For what it is, the survey gives a great general idea of the week by week trend in rates, as long as you look at it on a longer term horizon. But the numbers in the survey are not live rate quotes. For those, you need a qualified professional, a game plan, and a phone/email address.
I’ve got a live rate quote form right up there on your right, if you’d like to know more.
Return of “The Mac”
Use the Freddie Mac survey when you’re in the early phases of shopping for a home, before you have something to lock in. We’ll see what happens with today’s release. Probably a catch-up from last week’s movement. A week after the fact just isn’t helpful if you’re shopping for a mortgage.
Update!
The Week 6 Freddie Mac survey was just released. And, as predicted, it has caught up to last week’s move, showing the average rate up to 5.05%. But it’s currently this week, not last week. In fact, it’s Thursday of this week. So is the report accurate? Sure, but it is not real time. And therefore, if you are shopping for a mortgage, it really doesn’t give you more than a general idea. Use it accordingly.