When are rates going to go up? Here's a big hint...

The Federal Housing Finance Agency (FHFA)announced today that Fannie Mae and Freddie Mac will be

required to raise their guarantee fees (“g-fees”) by 10 basis points on all single-family mortgages.

This increase will be effective for loans closed on or after December 1^st, 2012. They’ll be working directly with lenders to facilitate these changes. The premise behind this move is that the US government wants to increase participation by private firms in the mortgage market. And this fee increase is seen as a way to move prices closer to the levels of private firms, if they were the ones evaluating credit risk.

Basically, the lenders will turn around and increase either their risk level pricing adjustments or their closing costs. Most likely, it’ll be the former, which means that the rates most likely will go up. The point is that they’ll pass these costs to the consumer. Unfortunately there’s no regulation in place to prohibit this from happening.

The markets will definitely dictate where rates go, as they always do. Other factors, such as November’s election, could also have a big influence. But it’s mandated changes from governmental agencies like the FHFA that can put an immediate and permanent stamp on the direction of rates. If you’re looking to purchase or refinance, now is the time to take advantage of the rates before they edge upward.

Have a happy and safe holiday weekend…