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Drone Attack Coming on Mortgage Interest Rates

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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.

Drone Attack on Interest Rates

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.

Chuck Mixon

Correct me if I am wrong but what I read is that the Loan Extension was for one year, but the life os some of these loans will be 15 and 30 years. Tell me that we are not digging our self into a hole. Chuck

Jan 16, 2012 05:50 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Harvey,  Terrific. just when we were starting to accumulate some positive news. !   

Jan 16, 2012 06:32 AM
Jennifer Chiongbian
Specializing in all types of Manhattan apts & townhouses - Manhattan, NY
Real Estate Broker - NYC

Crazy how they can think of doing this when we re still in a big black hole with the economy.  Thanks for the great info though!

Jan 16, 2012 06:38 AM
Anthony Daniels
Coldwell Banker - San Francisco, CA
SF Bay Area REO Specialist

They can only remain low for so long.  I think 2012 will see them start rising up.

Good post, thanks for sharing it.

Jan 16, 2012 06:45 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I wish they would just stop everything....stop messing with the market. And tax cuts bring in more money to the Treasury....every time it's tried, so this is just a smoke screen.

Jan 16, 2012 06:58 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

The moral of the story is that time is of the essence.  Agents need to pass this info on, just as we lenders do.  I've notified all in my database that this is coming ... and also making those that are just now in contact with me of these changes, as well.  Definitely reason to get off the fence and make a decision about buying sooner than later.

Keep on preachin' ... and spreadin' the word!


Jan 16, 2012 07:30 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

We knew the low interest rates couldn't last.  Too bad they are now attached on some stupid rider.  Sounds like the classic Robbing Peter to Pay for Paul.  But, we knew it was coming one way or 'tother.

Jan 16, 2012 07:43 AM
Robert Hammerstein -
Christie's International Real Estate - Hillsdale, NJ
Bergen County NJ Real Estate

Harvey - Thanks for this information and will be passing this along to all our buyers who are sitting on that proverbial fence.... Much appreciated....

Jan 16, 2012 08:03 AM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Harvey thanks for the reminder as stated above its time for buyers to get off the fence because mortgage rates are certainly under ATTACK.

Jan 16, 2012 09:45 AM
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Great info Harvey - always good to know this for potential buyers and those looking to re-fi.  Thanks for the heads-up!

Jan 16, 2012 10:03 AM
Susan Jackson
America's Network Realty Group, Inc - Sandy Springs, GA

Thanks for clarifying the information for me.  I knew it was coming but did not know when.  Good ammunition when  trying to convince those buyers sitting on the fence to jump off.

Jan 16, 2012 10:57 AM
john Doe
Arlington, VA


Thanks for the heads up.  Unfortunately this is probrably the beginning of "new" fees to pay for ?????? that will impact the market.  I hope I'm wrong.  Either way, lock in those rates NOW.



Jan 16, 2012 12:21 PM
Nancy Laswick
United Real Estate - Phoenix, AZ
Your REALTORĀ® For The Valley Of The Sun

Thanks for the heads up Harvey. I guess I feel like Carla, another robbing Peter to pay Paul. Congress extends the Payroll Tax Reduction and wants new homeowners or homeowners who refi to pay for it.

Jan 16, 2012 01:04 PM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Good info Harvey, and although it appears it will increase mortgage rates, they will still be in the low to mid 4s and will still be amazing rates for most buyers.

Still, it would certainly be better if the geniuses just let the market correct itself, instead of 'helping' in their own way.


Jan 16, 2012 02:26 PM
Eric Michael
Remerica Integrity, RealtorsĀ®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519
While I fully understand what your saying about j Teresa rates going up possibly a quarter percent, they're still going to be extremely low compared to historical rates.
Jan 16, 2012 02:54 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Harvey - This will effect some buyers' ability to buy the homes they planned if their ratios are too stretched.

Jan 16, 2012 03:54 PM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

It was bound to happen sooner than later.  Thanks for the info Harvey.

Jan 16, 2012 10:33 PM
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease


Love the title - stealth attack by government to NOT help the housing industry.  It reminds me of checking out of a hotel in NYC.  Lots of lines of charges because they can tax you death when you visit.  

Now, they know this won't stop you from buying, BUT hardly the time to implement in housing.

All the best, Michelle

Jan 17, 2012 12:31 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

on a $100,000 mortgage the difference in payment between 4.5% and 4.625% is what? about $8 a month. that is probably not a deal killer.



Jan 17, 2012 01:18 AM
Rob Spinosa
US Bank - Larkspur, CA
Mortgage Loan Originator, Marin County

There is a bright side to this very unwelcomed change.  Basically, the brain trust that is Congress contains a large contingent that is intent on scaling back or eliminating Fannie and Freddie (and to a lesser degree the FHA).  This would be the far more deleterious outcome as these entities touch 9 of 10 loans being made these days.  So, in essence, by raiding this pantry to fund the payroll tax cut extension, Congress has unintentionally extended a lifeline to the GSE's and that should enable lenders to continue to make these loans for the foreseeable future.  Whether you agree or not with the purview of the GSE's, it is tough to make a case that we could do without them right now.

So, I'm not happy about the G-fee increase either, but in the grand scheme of things, it is not the worse outcome.  And we have already proven that low rates are not the panacea for what ails this housing market.  We need more access to credit, not cheaper borrowing costs, if we wish to see health return to housing.

Jan 17, 2012 02:02 AM