Refinance Fee Hike Increases Rates

Mortgage interest rates continue to be near the all-time low levels we have continued to experience since June of this year. Mortgage rates are still at historically low levels despite the Federal Housing Finance Administration (FHFA) refinance fee hike that we wrote about in August, “Profiting from the Coronavirus Crisis?” By now this FHFA .5% fee increase has been implemented by most lenders.

This hike to the fee, not to the rate, of mortgage refinances means interest rates for mortgage refinance transactions sold to Fannie Mae and Freddie Mac (which is the majority of refinance loans funded) are seeing a .125% – .25% rate increase across the board.

Purchase Rates Lowest I’ve Ever Seen

Interest rates for home purchases on loan amounts that conform to Fannie/Freddie loan limits are at the lowest levels I have ever seen because the FHFA fee hike is only being applied to refinance transactions and not to purchase transactions.

California Home Purchase Demand

California overall is still seeing a high demand for home purchase financing, which continues to be exacerbated by low inventory coupled with historically low-interest rates.

Jumbo Loans

For loan amounts above the Fannie/Freddie loan limits, non-conforming or jumbo loans, availability has waxed and waned over the course of this year. I am currently seeing more lenders coming back into those markets each month.

We have gone from access to 60+ Jumbo lenders prior to March 2020
to zero lenders from March 2020 to June 2020
to ten lenders as of September 2020.

Jumbo lending tends to have tougher lending guidelines and so, the loans are more difficult to qualify for. Mortgage rates for jumbo loans before March 2020 were very competitive with Fannie/Freddie conforming loans.

Current Jumbo rates are within .25% – .5% of conforming loans.

It is still possible to pay an additional fee to buy down the rate on a jumbo 30 Year Fixed mortgage to below 3% APR, which is still a historically low rate environment, despite the overall lack of investor appetite for jumbo loans.

Purchase Loans Closing in 15-21 Days

In some markets, especially where I am physically located in the Bay Area, I am still closing purchase transac