It looks like mortgage rates and costs are headed up thanks to the federal government’s policy of “robbing Peter to pay Paul” to fund a temporary payroll tax cut extension. Fannie Mae announced on December 30, 2011 plans to increase funding costs to lenders on April 1, 2012:
As directed by the Federal Housing Finance Agency (FHFA), pursuant to the federal Temporary Payroll Tax Cut Continuation Act of 2011 (Act), Fannie Mae must increase by 10 basis points the guaranty fee that we will charge for all single-family mortgage loans delivered on or after April 1, 2012. To comply with this directive, we will increase by 10 basis points the guaranty fee applicable to single-family loans in MBS pools that have issue dates on or after April 1, 2012. Fannie Mae will make similar adjustments to the base pricing for single-family loans committed through its single-family whole loan programs and other negotiated transactions.
If you have a loan already locked and in process, this likely won’t impact you. New rate locks won’t be impacted either, as long as the loan can be delivered to Fannie Mae before the April 1st deadline – which means it probably needs to fund within the next 30 days.
It’s hard to say exactly how this change will impact borrowing costs from lender to lender, but because Fannie Mae financing is so prevalent in the mortgage market today, there’s no question it will raise costs for mortgage borrowers.
