Mortgage California Blog

Now is the time to lock in a rate

September 13th, 2012

Fannie Mae and Freddie Mac, the U.S.-owned mortgage finance companies will raise the fees they charge lenders to guarantee loans (“g-fees”), the Federal Housing Finance Agency (FHFA) said in a statement.

This guarantee-fee increase will take effect between November 1 and December 1 depending on the investor.  Most mortgage bankers expect to see this increase passed along to borrowers in the form of higher interest rates offered by investors.

The good news is that it shouldn’t stall mortgage lending, as many lenders have been anticipating this since FHFA were seized by regulators in 2008.

Per BusinessWeek’s article recently, David Stevens, president of the Mortgage Bankers Association, stated that the lack of private capital in the housing market isn’t driven only by competition from Fannie Mae and Freddie Mac but also by uncertainty about prices and other concerns.

Bloomberg’s article on the subject states that FHFA Acting Director Edward J. DeMarco sought the fee increase to boost fiscal stability at the government-sponsored enterprises and shrink their footprint in the mortgage market, where they own or guarantee about 60 percent of U.S. home loans.  Additionally, the last g-fee increase took effect in April after Congress boosted them to fund a payroll tax cut.  The net result was a slight increase in interest rates.

So the reality is that it will have some impact on pricing, so now would be the time to contact your mortgage consultant to look into whether refinancing or buying now is the right move for your current fianancial situation and goals.

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