There's a drone attack coming on mortgage interest rates that's flying under the real estate radar. Watch out, as this stealth action will increase interest rates very soon.
Just as mortgage interest rates hit all time lows, home buyers will be taken by surprise this month as recent Congressional action will increase interest rates. In an effort to pay for the Payroll Tax Reduction extension, Congress elected to raise the Guarantee Fee it charges Fannie Mae and Freddie Mac for all mortgage loans. This increase will be passed along to all lenders, which will result in higher interest rates for all borrowers.
This increase will take effect for lenders on all settlements that occur on or after April 1, 2012. This date will impact all loans being sold or delivered to Fannie Mae or Freddie Mac by lenders. In order to for a loan to meet this April settlement date, it will probably need to close by the end of February, allowing the lender enough time to package and deliver the loan to these agencies by the deadline.
Interest rates will be increasing almost immediately, depending on the lock period selected by the borrower. The first increase in interest rates will occur with 45 and 60 day lock periods, to allow enough time to process, close and deliver these loans prior to the April 1st deadline. Anticipate 30 day locks increasing by the end of January and 15 day locks by mid February.
We anticipate interest rates will increase between .125% and .25% in rate depending on the note rate of the loan.
Harvey Collier - Loan Consultant - Primary Residential Mortgage - Fort Lauderdale FL.
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