By Sabrina Karl
Mortgage rate shoppers contemplating when to apply for a new or refinanced loan, or when to lock their rate, often look to the national averages to see where rates are moving. Though there is never a crystal ball on where rates will head in the future, you can see where they’ve moved in the past day or week.
These averages are often quoted in the news media — such as “Mortgage rates drop to all-time low”, as we’ve seen more than once in the past several months. But it’s also possible to see news coverage saying mortgage rates rose this week while another average indicates they’ve dropped. So what gives?
The answer is that there are multiple organizations and methodologies tracking mortgage rates. The most commonly cited is Freddie Mac’s weekly average. Having tracked mortgage rates since 1971, Freddie Mac is approaching a milestone of having 50 years’ worth of mortgage rate data.
Watching Freddie Mac’s weekly average provides a good finger on the pulse of rate movement. But its methodology isn’t perfect. Namely, it surveys lenders at the start of the week, with all of them submitting rates no later than Tuesday. The average is then calculated Wednesday and released Thursday morning. So Freddie Mac’s average is essentially from the first two days of that week.
Another popularly quoted average is calculated by the Mortgage Bankers Association. Here again, the data is reported weekly, on Wednesdays. But instead of averaging two days worth of rates, it uses a full week’s worth. However, the average reported Wednesday is from the previous week ending Friday.
For those who want to watch rates at a more granular level, Mortgage News Daily’s survey employs yet another methodology, this one producing a daily afternoon average that shows the market’s micro movements.