Freddie Mac said on Thursday, Nov. 12, that the average 30-year fixed mortgage rate fell to 7.11 percent, its lowest in seven weeks. On the same day, Mortgage News Daily put the 30-year fixed rate at 7.42 percent. A borrower who called a lender that afternoon could have been quoted something else again.
None of those numbers is wrong. They measure different things.
What Freddie Mac measures
Freddie Mac's Primary Mortgage Market Survey is an average. It covers conventional, conforming, fully amortizing loans to buy a home. The borrowers in it put 20 percent down and have excellent credit.
The survey averages rates from applications taken Thursday through Wednesday. The number published on a Thursday describes the week before it.
On Nov. 12, that average was 7.11 percent for a 30-year fixed loan, down from 7.18 percent a week earlier, Freddie Mac said. It was the fourth straight weekly decline. A year earlier the average was 6.24 percent. The 15-year fixed rate averaged 6.45 percent, down from 6.57 percent; a year ago it was 5.49 percent.
What Mortgage News Daily measures
Mortgage News Daily publishes a daily rate. On Nov. 12, its 30-year fixed figure was 7.42 percent, up 0.12 percentage point on the day. It said rates were up about a quarter of a point since Freddie Mac's prior survey.
Mortgage News Daily notes that Freddie Mac's survey is an average over the prior days, so it lags. When rates are rising quickly, a daily figure can sit above the weekly average. When rates are falling, it can sit below.
That is what happened this week. Treasury yields rose on Thursday, with the 10-year yield up to 5.105 percent, its highest since Oct. 21, Reuters reported. Freddie Mac's average, built mostly from earlier applications, showed a decline.
Why a quote can differ from both
A published rate is a description of the market. A quote is an offer to one borrower, on one loan, on one day.
Freddie Mac's survey describes a specific borrower: 20 percent down, excellent credit, a conforming loan. A borrower who looks different from that can be quoted a different rate. For example, a buyer putting less than 20 percent down, or with a credit score below the excellent range, is not the borrower the survey describes.
Lenders also quote daily and individually. Two lenders can quote the same borrower different rates on the same morning, and one lender can quote different rates on Tuesday and Thursday.
What to compare
A quote is most useful next to another quote, not next to a headline average. Quotes taken on the same day, for the same loan type, term and down payment, can be compared with each other. A quote taken on Monday and one taken on Friday may reflect a market that moved in between.
The headline averages still have a use. Freddie Mac's weekly figure shows the direction of rates over time. Mortgage News Daily's daily figure shows where they went most recently. Neither one is the rate a particular lender will offer.
"Mortgage rates dropped to their lowest level in seven weeks, a welcome development that gives borrowers greater flexibility," Freddie Mac's Sam Khater said in the Nov. 12 release. That describes the survey average. On the same day, the daily measure had moved the other way.