Freddie Mac

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Mortgage rates are rising and the Federal Reserve is set to meet next week. Let’s get right into the latest news and cover our predictions in today’s Mortgage Monday update!

Rates Update

For the seventh week in a row, Freddie Mac reported mortgage rate increases in their weekly Primary Mortgage Market Survey. According to their report last Thursday, 30-year fixed-rate options were averaging at 5.11 percent; however, it’s important to remember that Freddie’s gathering of industry data is a bit behind what’s really happening. Mortgage rates may have been around 5.11 percent at the time, but since then they’ve increased even further. It’s no secret that mortgage rates are continuing to rise, but as of today they’re on track to hit 5.50 percent by the end of May – if not sooner…

This brings us to our next piece of news: the Fed’s strong hinting at even more interest rate increases in the months to come. More on this in the next section.

Federal Reserve to Meet May 4 – Will Rates Increase Again?

The Federal Reserve is focused on combating inflation, which has been sitting at record-high levels since early this year. A side effect of this has been higher mortgage rates across the board; and last week, Fed Chair Jerome Powell again pointed to more drastic interest rate increases through the rest of this year. When the Fed holds its next meeting on May 4, we could see rates increase by 50 basis points (0.50 percent) – twice as much as a “traditional” rate hike. If this happens, it could pave the way for even more dramatic rate increases in the future.

With that said, the window to refinance is closing rapidly and will likely get even smaller next week. According to the Mortgage Bankers Association (MBA), refi applications are already down to about 35 percent of recent market activity. This is expected (especially considering industry trends this year) and in the coming months, we’ll likely see refinancing become a less feasible option for most homeowners. Get in touch with us if you’re interested in exploring refi options before the opportunity passes.

In Closing

The biggest takeaways from last week are that mortgage rates are continuing to rise – mainly to fight back inflation – and that now is the time to refinance ahead of the Fed’s meeting next Wednesday.

Our predictions: the Fed will announce another interest rate increase on May 4. Refinance applications will likely decline further as a result, but rising rates could lower the level of market competition among prospective homebuyers.

If you have any questions, we’re here to help. Our team of dedicated mortgage bankers is available 24/7 to guide you through the process from start to finish – even in today’s volatile market. Apply now or find a mortgage banker to get started. And as always, enjoy the rest of your week!

Source: totalmortgage.com

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Mortgage rates increased this past week as the benchmark 10-year Treasury zoomed up to levels last reached in March, largely because of the fight over raising the U.S. debt ceiling.

Freddie Mac’s Primary Mortgage Market Survey increased 18 basis points to 6.57% as of May 25 from 6.39% the prior week and 5.1% for the same period last year.

The 15-year FRM rose 24 basis points on a week-to-week basis to 5.97% from 5.75%. One year ago it was at 4.31%.

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“The U.S. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “Dampened affordability remains an issue for interested homebuyers and homeowners seem unwilling to lose their low rate and put their home on the market.”

Zillow’s rate tracker as of Thursday morning for the 30-year FRM was at 6.68%, up from 6.37% one week ago.

The yields on the 10-year Treasury went to 3.78% at 11:30 a.m. on May 25 from 3.65% on May 18 as investors pulled back on fears a deal to raise the debt ceiling won’t be reached, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday night.

“The unlikely event of debt default would lead to a credit crisis that could wreak havoc on the financial system and the economy,” said Divounguy. “A default is widely expected to result in a large income shock that pushes the U.S. economy in a recession.”

Meanwhile, the banking crisis has resulted in credit tightening, while at the same time some Federal Reserve officials are commenting that inflation is still running higher than they would like.

“Mortgage rate volatility will remain elevated as investors pay close attention to the debt ceiling negotiations and this week’s inflation reading from the [Personal Consumption Expeditures] price index,” said Divounguy.

Freddie Mac has switched to what it termed “a qualitative narrative outlook” for the mortgage market, versus the quantitative version it published quarterly in the past and which is still used on a monthly basis by Fannie Mae and the Mortgage Bankers Association.

Unlike the economists at those entities, Freddie Mac’s baseline case is for a slowing economy but not a recession, it said in a blog post.

“On the purchase side, low levels of home sales coupled with falling national house prices will likely keep home purchase originations flat this year,” the forecast said. “But, as home price growth turns positive and home sales gradually rise, purchase originations will resume modest growth in the second half of this year and into the next.”

Meanwhile refinance volume will remain low as many borrowers are out of the money because of the interest rate environment.

“But as rates ebb and flow, some opportunities will present themselves and a trickle of refinances will flow through,” Freddie Mac’s forecast said. “There also remains refinance demand for non-rate-related reasons, such as the cancellation of FHA mortgage insurance premiums by refinancing into a conventional loan and term extension.”

Source: nationalmortgagenews.com

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Volatile mortgage rates jumped back to the mid-5% level this week, slowing down the housing market, according to the latest survey from Freddie Mac.

The 30-year fixed-rate mortgage increased 42 basis points this week to an average of 5.55%, up from last week’s 5.13%. A year ago this time, rates averaged 2.87%. The index compiles purchase mortgage rates reported by lenders during the past three days.   

“The combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market,” Sam Khater, chief economist at Freddie Mac, said in a statement. “Home sales continue to decline, prices are moderating, and consumer confidence is low. But, amid waning demand, there are still potential homebuyers on the sidelines waiting to jump back into the market.”

On HousingWire’s Mortgage Rates Center, Black Knight’s Optimal Blue OBMMI pricing engine measured the 30-year conforming mortgage rate at 5.741% Wednesday, up from 5.505% the previous week. Meanwhile, the 30-year fixed-rate jumbo was at 5.529% Wednesday, up from 5.323% the week prior. 

Higher mortgage rates reflect the Federal Reserve’s continuing actions to control persistent inflation. The Fed raised interest rates by 75 basis points in July’s meeting, marking its fourth rate hike this year.

According to the meeting minutes, the Fed sees more hikes in the future – the Fed’s next meeting is on September 20 and 21 –, but the pace could slow given that the Consumer Price Index (CPI) in July was flat from the previous month.   

How will non-QM perform for the rest of 2022?

With rising rates and inflation, non-QM lending has spent the last few months in choppy waters, with some lenders closing their doors. However, the outlook for non-QM for the rest of 2022 is relatively optimistic, according to Acra Lending CEO Keith Lind.

Presented by: Acra Lending

So far, mortgage rates at the 5% mark brought applications to the lowest level in two decades, according to the Mortgage Bankers Association (MBA).

The market composite index, a measure of mortgage loan application volume, declined 1.2% for the week ending Aug. 19. The refinance index had a 2.75% decline from the previous week, and the purchase index was down 0.5%.

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.85% with an average of 0.8 points, up from last week’s 4.55%. The 15-year fixed-rate mortgage averaged 2.17% a year ago.  The 5-year ARM averaged 4.36% this week, down from 4.39% the previous week. The product averaged 2.42% a year ago.

Looking ahead, Fannie Mae’s Economic and Strategic Research Group expects total home sales to decrease 16.2% in 2022, a further downward revision from July’s projected drop of 15.6%.

“Housing remains clearly on the downtrend — and has been for several months now — due to the combined effects of outsized home price increases and the significant and rapid run-up in mortgage rates,” Fannie Mae’s Chief Economist Doug Duncan said in a statement.

Source: housingwire.com

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What a difference a year can make.

Today’s mortgage rates are more than 1 percentage point higher than a year ago. Plus, rates edged even further up this week, to 6.39% for a 30-year fixed-rate loan, compared with 6.35% a week earlier, according to Freddie Mac.

These stubbornly high interest rates, combined with headstrong home prices, have plunged the entire housing market into a strange sort of stalemate.

On the one hand, 82% of home sellers feel “locked in” by the low mortgage rates they’d secured years earlier. Meanwhile, cash-strapped homebuyers with few new listings to pique their interest feel locked out of the American dream.

Yet despite this unrelenting real estate limbo, there are small signs of life kicking around that spell hope in the weeks ahead.

“While today’s 30-year fixed mortgage rate is more than 1 percentage point higher than a year ago, several housing indicators showed that buyers and sellers are still actively seeking opportunities, though at a slower pace,” notes Danielle Hale, chief economist for Realtor.com®, in her weekly analysis.

Here’s what the most recent housing statistics mean for both buyers and sellers in our latest installment of “How’s the Housing Market This Week?”

The median asking price on a home in April was $430,000. Yet for the week ending May 13, home prices came in a mere 1.1% higher than a year ago—less than half the price growth seen in the previous three straight weeks (2.4%).

Practically, this means that “price growth is weakening,” says Hale. Yet she still points out that “significant price declines are not observed.” For now, “sellers are still in a very good position.”

Why home sellers aren’t listing

Even though home sellers are sitting pretty on record amounts of home equity, many remain skittish about listing since it would mean trading in their low mortgage rate for something much higher.

As a result, the number of new listings hitting the market has declined for 45 straight weeks, and is still down by 25% compared with a year ago for the week ending May 13.

Yet that doesn’t spell complete doom and gloom for homebuyers, since total housing stock (of listings both new and old) is still up 23% compared with the same week last year.

And here’s more good news according to Hale: “Recent fluctuations in new listing declines indicate that sellers are closely monitoring the market and looking for chances to maximize their profit.”

In other words, home sellers are watching and waiting for the right moment to strike—and when they do, the floodgates will open.

“With an improving seller’s sentiment and the approaching months when a large number of homes hit the market,” Hale anticipates, “it is very likely to see some improvement in new listings in the upcoming weeks.”

In other words, buyers should hang tight, since a fresh bounty of listings is bound to hit soon, which should help push prices down while also offering up a greater selection.

Why the pace of home sales is slow, but picking up

Homes continue to sit on the market longer than they did a year ago. For the week ending May 13, homes spent 15 more days on the market compared with last year, marking 41 weeks in a row that it’s taken longer to sell a home compared with the same week the previous year.

However, this slower pace of home sales does seem to be picking up just a bit.

“While homes are sitting on the market for a longer time period than a year ago,” Hale notes, “a shrinking difference suggests competitions still exist.”

In other words, opportunities for homebuyers and sellers are still out there if they look hard enough.

Source: realtor.com

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April 4, 2022
by Zach Festini

As mortgage rates continue to rise, it’s more important than ever to stay updated on the latest industry news. Let’s get right into it and cover last week’s happenings that are continuing to affect the mortgage market.

Rates Update

Last week, mortgage rates kept moving upward in accordance with rising inflation and the Federal Reserve’s interest rate announcement (more on that below). Freddie Mac reported rate increases across the board for the week ending Thursday, March 31; and like many experts, they predict that this rising trend will continue.

The average lender is now offering well over 4.50 percent for 30-year fixed-rate loans, which should signal prospective borrowers to pursue financing now. Should this pace continue, we could see the average mortgage rates for 30-year options near five percent within the next month.

Our forecast: mortgage rates will continue to rise. The pace at which they do so will likely be dictated by the Fed’s six remaining meetings this year, which will probably come with announcements of further interest rate spikes. If you’re in the market for something new, we can’t stress enough how important it is to finance your home now. Our team of dedicated mortgage bankers is ready and available to help. Find one now or contact us with any questions.

Older, but Still Important News

Let’s cover some older industry news that has affected buyers since the start of this year.

  • For the first time since 2018, the Federal Reserve announced that interest rates will be rising by 0.25 percentage points – meaning mortgage rates will also rise – and that future increases will come over the rest of this year with each proceeding Fed meeting. To prospective buyers everywhere, this should be viewed as a red flag and a sign to follow through with a home purchase sooner rather than later.
  • Purchase applications are continuing to overtake refinance applications. And with the Fed applying upward pressure on mortgage rates through the rest of this year, opportunities to refinance will decline accordingly. When rates were at historic lows during the early pandemic, refinancing was an extremely appealing option for homeowners everywhere. Now that they’re back on the rise, though, we’re already seeing the opposite as we return to a high-demand purchase market. If you’re looking to refinance, act quickly and contact a Total Mortgage loan officer now.
  • At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.

To learn more about any of these recent developments, contact your Total Mortgage loan officer today.

In Closing

When it comes to financing a home, the time to act is now. The opportunity to refinance is already declining and the window to secure long-term savings with a lower rate is beginning to close. The sooner buyers act and lock in their rates, the more they’ll save in the long run. Contact us now with any questions and enjoy the rest of your week!

Filed Under: Uncategorized

Source: totalmortgage.com

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The data, published on Monday, shows that older vintage mortgages (loans originated before 2010) accounted for under 9% of the total refinanced during the Covid-19 refi boom. This contrasts with nearly a third of mortgages refinanced from 2015 and later vintages. 

As it makes sense to refinance if the balance is higher, less than 10% of the mortgages with balances below $100,000 outstanding as of the first quarter of 2020 were refinanced, compared to half of those with balances between $400,000 and $500,000. 

When broken down by investor type, 38% of U.S. Department of Veteran Affairs mortgages outstanding as of the first quarter of 2020 were refinanced by the end of 2021, compared to 25% of Fannie Mae and Freddie Mac mortgage loans and 22% of Federal Housing Administration mortgages. 

According to the New York Fed researchers, the refi boom will have impacts for decades.

About 64% of the refis were for borrowers to get better rates, which resulted in an average payment reduction of $220. Nine million borrowers refinanced their loans without equity extraction, with an aggregate decrease of $24 billion annually. 

In addition, five million borrowers extracted $430 billion of home equity through cash-out refis. The average amount cashed out was $82,000, and the average monthly payment increased by $150. 

“The mortgage refinancing boom is over, but its impact will be seen for decades to come,” Andrew Haughwout, director of Household and Public Policy Research at the New York Fed, said in a statement. 

“As a result of significant equity drawdowns, mortgage borrowers reduced their annual payments by tens of billions of dollars, providing additional funding for spending or pay downs in other debt categories,” Haughwout added.   

According to the researchers, the 2020-2021 refi boom differed from the refi booms in 2003 and 2013 for three reasons: Interest rates were historically low; home equity was at an all-time high leading to the pandemic; and the rebound in rates was historically steep.

In fact, when the market turned, the 30-year mortgage rates rose by 400 basis points, climbing from a historically low rate of 2.68% in December 2020 to 6.90% in October 2022. Such an increase had not been seen since early 1980, per Freddie Mac’s estimates. 

And, the mortgage market is still recovering.

The New York Fed’s Center for Microeconomic Data shows in its Quarterly Report on Household Debt and Credit that mortgage originations – measured as appearances of new mortgages on consumer credit reports – dropped in Q1 2023 to $324 billion. 

That’s the lowest level seen since Q2 2014, which was an unusually low quarter due to the “taper tantrum.”

Meanwhile, the pace of equity extraction halted when mortgage rates began climbing. Quarterly equity extraction volumes were near historic lows in the first quarter of 2023, mainly as a share of disposable personal income, researchers said.  

“Owners now looking to move will face increased borrowing costs and higher prices, with current home prices being more than 36% higher than they had been pre-pandemic,” the researchers concluded. “The improved cash flow generated by the recent refinance boom will potentially provide significant support for future consumption.” 

Source: housingwire.com

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Purchase mortgage rates continue their roller coaster ride – they moved above 5% this week, according to the latest purchase mortgage survey from Freddie Mac.

The 30-year fixed-rate mortgage increased this week to average 5.22%, up from last week’s 4.99%. A year ago this time, rates averaged 2.77%. The index compiles rates reported by lenders during the past three days.   

“The 30-year fixed-rate went back up to well over 5% this week, a reminder that recent volatility remains persistent,” Sam Khater, chief economist at Freddie Mac, said in a statement.

Mortgage rates tend to align with the 10-year U.S Treasury yield, which increased five basis points in one week to 2.78% Wednesday. 

The volatility in rates reflects the Federal Reserve actions to control persistent inflation. The Fed raised interest rates by 75 bps in its July’s meeting, marking its fourth rate hike this year.

So far, the tightening monetary policy brought a technical recession, as the gross domestic product fell by 0.9% in the second quarter, marking the second consecutive decline. (The Biden administration has refused the country is in a recession, citing a strong labor market.)

Creating a path to success in today’s purchase market

Meeting the needs of a new generation of homebuyers while managing the ebbs and flows of a volatile housing market is a major endeavor for any mortgage lender. So, what should lenders be doing to thrive in the face of a post-pandemic housing market rife with new hurdles?

Presented by: Calyx

In addition, year over year, the Consumer Price Index (CPI) for all items rose 8.5% in July, down from the 9.1% yearly increase reported a month ago. Inflation did not increase from June to July.

“Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market,” Khater said.

He added: “Declines in purchase demand continue to diminish while supply remains fairly tight across most markets. The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer.”

Regarding borrowers demand for mortgage loans, according to the Mortgage Bankers Association (MBA), the market composite index, a measure of mortgage loan application volume, increased 0.2% for the week ending Aug. 5.

The refinance index rose 4% from the previous week, and the purchase index was down 1%.

Loan officers told HousingWire that, amid volatility, they had seen an uptick in cash-out refis. There is a general concern with the trajectory of the economy, and borrowers worry their home may go down in value as the market cools – in this case, they would have less equity to access.

On HousingWire’s Mortgage Rates Center, Black Knight’s Optimal Blue OBMMI pricing engine measured the 30-year conforming mortgage rate at 5.351% Wednesday, down from 5.448% the previous week. Meanwhile, the 30-year fixed-rate jumbo was at 5.261% Wednesday, down from 5.472% the week prior, according to the Black Knight index. 

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.59% with an average of 0.7 point, up from last week’s 4.26%. The 15-year fixed-rate mortgage averaged 2.15% a year ago. The 5-year ARM averaged 4.43% this week, up from 4.25% the previous week. The product averaged 2.44% a year ago. 

Source: housingwire.com

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Washington, DC
CNN
 — 

Mortgage rates bounced back up this week after falling for two weeks in a row.

The 30-year fixed-rate mortgage averaged 6.39% in the week ending May 18, up from 6.35% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.25%.

Economic crosscurrents have kept rates within a 10-basis point range over the last several weeks, said Sam Khater, Freddie Mac’s chief economist.

“While affordability remains a hurdle, homebuyers are getting used to current rates and continue to pursue homeownership,” said Khater.

Mortgage rates topped 5% for the first time since 2011 a little more than a year ago, and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November.

Over the last month, rates have gone up and down, but have stayed under 6.5%.

“Mortgage rates have remained in the roughly 6% to 7% range for the last eight months and will likely remain in this range until incoming economic data makes the economy’s path forward more clear,” said Hannah Jones, Realtor.com economic data analyst. “Buyer demand has been sensitive to the ebb and flow of mortgage rates, but near-peak home prices and elevated inflation mean many would-be buyers are still waiting on the sidelines.”

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

Inflation is cooling, but debt limit uncertainty looms

Mortgage rates went up following a rise in the 10-year Treasuries this week, as investors continue to digest data related to inflation and keep their eye on the ongoing standoff in Washington about raising the debt limit, which is creating uncertainty.

While inflation is cooling, recent data shows signs of a stubborn, though slowing economy, said Jones, suggesting that the Federal Reserve’s rate hikes are having the intended effect. However, inflation remains well above the central bank’s target level and unemployment remains near all-time lows.

If a deal is not reached providing an extension of the debt limit, the United States would default on its debts for the first time. This could further crush an already struggling housing market, sending the cost to purchase a home up 22% and spiking mortgage rates to over 8%, according to one projection.

“The economy remains on fragile footing and a US default would cause an interest rate spike that could erase any progress towards a healthier housing market by cutting deeper into home sales,” said Jones.

A default remains unlikely, but, Jones said, the closer we get to a possible event date — which could be as soon as June 1 — without an increase in the debt limit, the more households will be hurt by higher interest rates.

“The sooner the debt impasse is resolved, the less likely it is to negatively affect households already plagued by high prices,” she said.

Buyers remain rate sensitive

Home shoppers who are facing higher mortgage rates are also facing low inventory of homes to buy and still-strong competition from other buyers, especially at entry- and middle-level prices. Even though housing sales are down, demand for the few homes coming to market in an area can result in a bidding war that pushes prices higher.

This makes buyers even more rate sensitive, as they calculate how much house they can afford.

“Higher rates and low inventory levels continue to keep many prospective first-time buyers on the sidelines,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “Purchase applications for FHA loans — popular with many first-timers — were down 5% from last week and 17% from a year ago.”

Inventory is low because many homeowners who may otherwise put their home on the market are holding back and holding on to a mortgage rate several percentage points lower than a rate they’d take on by buying another home.

“Constrained buyers and reluctant sellers mean the spring market hasn’t picked up as much momentum as in years past, but each improvement in affordability is met with an increase in buyer activity,” said Jones. “Prices are likely to remain elevated in many markets where low inventory, especially at an affordable price point, is creating a competitive environment.”

Source: cnn.com

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If you own a second home or hold a high balance loan amount, you may want to refinance sooner rather than later. That’s assuming you were thinking of refinancing.

The same goes for those planning to purchase a second home or take out a mortgage with a high balance, which is a loan amount above the baseline conforming limit.

The conforming limit for 2022 is $647,200, so if your loan amount will be north of that, take note.

Fannie Mae and Freddie Mac are raising loan-level price adjustments (LLPAs) for both types of transactions come April 1st.

Depending on the details of your loan scenario, this could drastically increase your closing costs and/or mortgage rate.

Second Home Mortgages and High Balance Loans Going Up in Price

old llpas

In an effort to bolster its support for affordable housing and sustain equitable access to homeownership, the Federal Housing Finance Agency (FHFA) will be raising (LLPAs) for certain transactions.

These LLPAs get passed onto consumers in the form of either more expensive closing costs or higher mortgage rates.

As noted, they pertain to the financing of second homes, whether a purchase or refinance, and high-balance loans, those which exceed the conforming limit.

The idea here is that these types of home loans go toward more affluent individuals. And they also create more risk for Fannie Mae and Freddie Mac, which are backed by taxpayers.

After all, large loan amounts and vacation properties are more likely to default and/or create larger losses for the Enterprises.

And that could jeopardize the mission of Fannie and Freddie, which is mainly to provide affordable financing to first-time home buyers, as well as low- and moderate-income borrowers.

Looked at another way, these new fees will subsidize programs like HomeReady, Home Possible, HFA Preferred, and HFA Advantage, which provide cheaper financing to lower-income borrowers.

Speaking of, fees won’t be going up on those programs, or for first time home buyers in high-cost areas with incomes at/below 100 percent of area median income.

How Much More Expensive Will Mortgage Rates Be in April?

new llpas

Before you get too worried, the cost of these changes may be minimal, depending on the loan scenario in question.

For example, upfront fees for high balance loans will increase anywhere from 0.25% to 0.75%, depending on the loan-to-value (LTV) ratio.

If we’re talking about a loan amount of $750,000 on a primary residence, another .25% in fee is roughly $1,875.

This might move the dial on your 30-year fixed mortgage from 3.25% to 3.375%, or simply increase closing costs.

If that fee is .75% higher due to an LTV of 80%, we’re talking $5,625 in cost, which will more than likely increase your mortgage rate an eighth of a percent or more.

It’s not the end of the world, but it’s yet another thing working against homeowners and home buyers as mortgage rates have started off 2022 higher.

And they tend to peak during spring and early summer, which means financing will be that much more expensive.

The situation is even worse for second home buyers or owners, where pricing adjustments will increase anywhere from 1.125% to a staggering 3.875%.

Using our same loan amount of $750,000, even at a low LTV ratio, the increase in upfront costs could equate to around $10,300.

If we’re talking a high balance loan on a second home at 80% LTV, which isn’t out of the question, it’s an additional cost of about $31,000.

Again, depending on if you let the rate absorb these additional costs, you could be looking at a rate that’s .25% to .50% higher, or more.

Second Home Owners and Those with Large Loan Amounts Should Review Their Mortgages Now

If you believe these changes may affect you, it could be a good time to review your outstanding home loans.

The same goes for prospective home buyers thinking about purchasing an expensive property or a vacation home, which are en vogue due to COVID.

As illustrated above, these higher pricing adjustments have the ability to raise mortgage rates considerably. Or at the very least bump up your closing costs.

With home prices and mortgage rates also seemingly headed higher by spring, it could make sense to accelerate any refinance or home purchase plans to avoid these looming fees.

The FHFA said the new fees won’t go into effect until April 1, 2022 to “minimize market and pipeline disruption,” aka higher pricing for confused customers.

But watch out for mortgage lenders beginning to price in changes earlier on. Simply put, this is yet another reason to make any planned move sooner rather than later.

If you own an investment property, the same types of pricing changes might be on the horizon. So if you’re looking for better terms or cash out, now might be the time.

Source: thetruthaboutmortgage.com