The Wall Street Journal recently reported on prospective homebuyers who use Freddie Mac to
determine their benchmark mortgage rate, only to find out that the mortgage rate they are offered by
the lender is much higher. That is because lenders will rely on sources for the latest rates other than
Freddie Mac.
One such source is Mortgage News Daily. Unlike Freddie Mac, which surveys lenders Monday through
Wednesday and publishes the average rate on Thursday morning at 10 a.m., MND updates mortgage
rates daily from Monday through Friday and usually determines the rates by economic factors, namely
inflation and the Federal Reserve’s decision whether to raise interest rates. As a result, the rates
displayed by MND will be higher than those by Freddie Mac.
On October 20, 2022, Freddie Mac announced that the 30-year fixed-rate mortgage rate was 6.94%; the
same day, MND determined that the 30-year FRM was 7.37%. However, the one additional piece of data
that Freddie Mac offers — and MND doesn’t — is fees and points. (One point equals 1% of the loan
amount.) According to the article, homebuyers usually pay down fees and points so they can secure a
lower mortgage rate.
The confusion over mortgage rates, according to the article, has to do with the volatile housing market.
The WSJ article pointed out that Freddie Mac’s methodology works when the housing market is “calm.”
But, as the past two years have shown, the housing market has been anything but calm.
Some mortgage brokers don’t blame Freddie Mac. “I don’t think it’s Freddie’s fault,” Lou Barnes, a
mortgage broker with Cherry Creek Mortgage in Boulder, Colorado, told WSJ. “I think the mortgage
market was in considerable disarray.”
To help reduce confusion among borrowers and lenders, Freddie Mac recently announced on its website
that, starting next month, the government-sponsored lender will make changes to how they determine
mortgage rates. This includes basing the weekly results “on applications received from thousands of
lenders across the country” and moving the release of the results from 10 a.m. to noon. In addition,
Freddie Mac will “no longer publish fees/points or adjustable rates.”
In the meantime, borrowers should look around for the best rates. “There are pretty large benefits
potentially to shopping around,” said Leonard Kiefer, the deputy chief economist for Freddie Mac.
