Conforming and Non-conforming loan prices are starting to get worse as Freddie Mac and Fannie Mae are increasing their Guarantee Fee (GFee) effective with April “settlements.”
Lender started to implement the price increase on rate lock for 45 days and 60 days already. 30 day pricing will be impacted starting from late January and 15 day pricing will be impacted starting from mid-Febuary. The impact will be around 50 to 80 BPS. 50 BPS for a 400,000 loan is $2000, which means you could see your rate worsen by about 0.125%.
So hurry up and call me asap if you are planning to refinance and have not locked your rate yet. As of today, I still have 3.875% for 30 year fixed loan if lock for 30 days.
The increase of the guarantee fee is used to bankroll the payroll tax cut extension signed by President Obama late in December last year. (Click here for the complete story).
On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises) by no less than 10 basis points from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises. The law also requires FHFA to determine a schedule for guarantee fee increases over a two-year period that must satisfy other requirements of the law.
