National Average Contract Mortgage Rate
The National Average Contract Mortgage Rate is notable because many lenders still use this interest rate when they "reset" the interest rate on an Adjustable Rate Mortgage or ARM loan, and was once the only federally sanctioned adjustable rate mortgage index. While it has for the most part fallen out of favor, it is still in use and therefore notable. Also called the National Mortgage Contract Interest Rate, it closely tracks the Fannie Mae 30/60 RNY and is reported by the Federal Housing Finance Board each month after its Monthly Interest Rate Survey.

RNY Fannie Mae & Freddie Mac Required Net Yield
Used very often in the conversion of ARM mortgages to fixed rate mortgages, the Fannie Mae RNY Required Net Yield is not an ARM index per se, but a calculation of the minimum yield that Fannie Mae requires for a given loan delivered to them within a given timeframe. If that sounds complicated, it is, but the simple explanation is that you may be exposed to this index if you are in a convertible ARM or balloon/reset mortgage.

The most commonly used index is the 30/60, which is the minimum yield accepted by Fannie Mae for 30 year fixed rate mortgages delivered for sale to Fannie Mae within 60 days by lenders.

If you are in a convertible ARM or balloon/reset mortgage, you may have significantly better options to convert to a fixed rate than your current loan affords, especially if you are looking to increase your monthly cash flow or wish to defer interest.

 

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