If you have clients who plan on refinancing their mortgages this year, make sure they’ve already locked in their rate.
Starting Sept. 1, refinancing fees on mortgages securitized by Fannie Mae and Freddie Mac will increase 0.5% as the mortgage giants impose an “adverse market refinance fee” on lenders due to market and economic uncertainty related to the COVID-19 pandemic that is increasing risks and costs. Lenders will then likely pass the fee onto borrowers through higher interest rates.
Even though there’s still some time before Sept. 1, lenders are not likely to offer new loans now that don’t incorporate the additional fee in their rates, says Greg McBride, chief financial analyst for Bankrate.com.
The additional fee will add $1,400 to mortgage payments for the average consumer, according to a statement from a coalition of 20 financial, housing and public interest organizations, including the Mortgage Bankers Association (MBA), American Bankers Association and Center for Responsible Lending.
They lambasted the move as a contradiction of “the administration’s recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners.”