The media - television, news broadcasts and headlines - regularly report Freddie
Mac's PMMS survey results. However, rarely, if ever, will they provide complete details about the
weekly survey.
When the public receives incomplete information
they can easily become suspicious. Anyone shopping for a mortgage can quickly feel uneasy with brokers
and lenders they speak with because the rates they are quoted are not what they expected. They assume the information
from their trusted news source was accurate. It was, to some degree. It just wasn't complete.
So, I caution you to use the PMMS as it was designed to be used - a market barometer of rate trends.
As example, the survey's 30-year fixed-rate is based on a minimum 20% down payment, a credit score not subject
to pricing adjustments (called Loan Level Price Adjustments), and points typically equal to about 0.7 points.
To illustrate, a PMMS survey from December 03, 2009, showed the 30-year fixed-rate to
be 4.71% and 0.70 points. A point is a fee of 1% of the borrowed amount. If you borrowed $200,000, 0.70 points
would equal $1,400 in closing costs, in additional to the customary transactional costs not noted in the survey.
Not realizing the news headline rate of 4.71% was based on paying points, someone shoping for a 30-year fixed-rate mortgage
may become disappointed (or even angered) to find their quote is 0.125% to as much as 0.375% higher than they anticipated.
