Fannie Mae and Freddie Mac’s Higher Fees Keep Rates from Falling
Sept 20th, 2012 (www.bankrate.com)
Mortgage rates reached new lows this week after the Federal Reserve started its bond-buying program. But they could have dropped lower if Fannie Mae and Freddie Mac had not raised mortgage fees.
The decline in rates was expected after the Fed said last week that it would spend $40 billion per month to buy mortgage bonds. But the move didn't push rates as low as it could have.
One reason rates have not tumbled is that the Fed's move coincided with the implementation of higher mortgage fees. On Nov. 1, Fannie Mae and Freddie Mac will increase the fees they charge lenders to guarantee loans. Lenders have already started to price their loans based on the higher fees because it can take several weeks before they close and sell the loans to Fannie and Freddie.
The fee hike is being passed on to consumers and translates into about a quarter of a percentage point increase in the rate borrowers get, says Greg Sinnott, director of secondary financing at CMG Mortgage.
"I personally find it a bit ironic that Fannie Mae and Freddie raised their fees, and then the Fed announced QE3 would involve directly buying (mortgage-backed securities), which dropped rates by roughly the same amount," he says.
The 30-year fixed should have been closer to 3.5 percent, based on how much the yields on mortgage bonds have dropped since QE3 was announced.
NATIONAL RATE SURVEY RESULTS
Sept 20th, 2012 (Bankrate.com)
30-year Conventional:
3.70% -- with avg. points: 0.43 pts
15-year Conventional:
2.95% -- with avg. points: 0.43 pts
30-year FHA:
3.52% -- with avg. points: 0.43 pts
5-year Conventional ARM:
2.69% -- with avg. points: 0.43 pts
30 Year Fixed Trend Over Last 3 Months
COLDWELL BANKER HOME LOANS – LOWER
DAILY RATE CHANGES - LAST 5 BUSINESS DAYS
Date Conventional FHA VA
09/20 Slightly Lower Slightly Lower Lower
· 10 Year Treasury Yield opened at 1.74
09/19 Slightly Lower Lower Lower
· 10 Year Treasury Yield closed at 1.78
09/18 Unchanged Unchanged Unchanged
· 10 Year Treasury Yield closed at 1.81
09/17 Lower Unchanged Unchanged
· 10 Year Treasury Yield closed at 1.84
09/14 Unchanged Slightly Lower Slightly Lower
· 10 Year Treasury Yield closed at 1.87
09/14(2) Higher Higher Higher
· Rate change for the worse
09/13 Lower Slightly Lower Slightly Lower
· 10 Year Treasury Yield closed at 1.76
09/13(2) Lower Lower Lower
· Rate change for the better!
09/13(3) Lower Lower Slightly Lower
· Rate change for the better!
RATEFORECAST
Sept 20th, 2012 (Bankrate.com)
Will rates rise or remain relatively unchanged this week?
Industry experts and analysts provide their insights.
· 39% of respondents expect rates to fall in the coming weeks
· 15% predict a further increase in mortgage rates while the remaining
· 46% forecast that mortgage rates will remain more or less unchanged
Competitor Updates
Lender 30 Year 15 Year
Bank of America 3.375% w/ 0.875 pt 2.75% w/ 0.75 pt
Wells Fargo 3.625% w/ 1.00 pt 2.875% w/ 1.00 pt
Citi Mortgage 3.375% w/ 1.125 pt 2.875% w/ 0.125 pt
Chase 3.625% w/ 0.625 pt 2.875% w/ 0.75 pt
*All rates reported from each competitor’s website as of 11:00 am EST today