In August, interest rates on conventional mortgages used to purchase newly built homes increased for the third month in a row, according to data released yesterday by the Federal Housing Finance Agency (FHFA). After rising by roughly 1 tenth of a percentage point in June and roughly 4 tenths in July, the average contract interest rate on conventional loans for newly built homes increased by another 26 basis points in August, to 4.20 percent.The average initial fee on the new home loans dipped slightly, from 1.11 to 1.06 percent. That was not nearly enough to offset the increase in the contract rate, so the effective rate on the loans (after amortizing the initial fees) also increased by 26 basis points, to 4.33 percent. Meanwhile, the average term on conventional new home loans continues to hover around 28 and half years (28.6 years in August).
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