Mortgage Rates Fall After FHFA Fee is Delayed to December 1

Mortgage rates fell sharply in recent days to end the week down, driven by a delay in the FHFA’s new 0.5-percent fee on some refinances.

The FHFA announced its Adverse Market Refinance Fee, which applies to all mortgage refinances serviced by government entities, will be delayed to December 1, rather than September 1. After the surprise announcement of the policy a couple of weeks ago, lenders scrambled to increase fees on all mortgages – not just refinances – to account for the losses they were due to incur on loans in which rates were already locked in. The decision to delay the policy’s rollout appears to have had the opposite effect, as rates immediately fell sharply on Wednesday following the news. The fee, of course, is still due to be implemented in the late fall, but the forewarning given to lenders this time around will likely mean that any future rate increases will be more gradual and weighted toward refinances, as the policy intends.

Looking ahead, the path for mortgage rates in the near term is difficult to predict, as economic data continue to paint a conflicting picture on the state of the economic recovery. Also looming is the August jobs report, due next Friday, which always has the potential to move markets.

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