Prompted by regulator the Federal Housing Finance Agency, mortgage finance companies Fannie Mae and Freddie Mac are raising the fees they charge lenders in an attempt to make non-government-backed lending more competitive.
The resulting increases will make a 30-year mortgage for a borrower with a 735 credit score and 10 percent down payment pay 2 percent of the total loan amount in fees, up from 0.75 percent currently. Borrowers making that same down payment who have a credit score of 750 would see the fees jump from 0.5 percent to 1.5 percent of the total loan, and for borrowers with a 775 score, the initial fee would be 1 percent, up from 0.5 percent.
Even borrowers who make heftier down payments could see increased fees, such as a jump to 2.25 percent from 1.5 percent for a borrower with a 690 credit score and 25 percent down payment.
And the increase, a senior FHFA official said Tuesday, isn’t even as high as a private investor would demand for a traditional rate of return.
“It’s another headwind for housing on top of other headwinds that, individually, might have been manageable,” Ivy Zelman, CEO of housing research firm Zelman & Associates, told the Journal. But combined with rising interest rates and shifting mortgage regulations, the increased fees could tighten mortgage credit next year, housing analysts said. [WSJ] — Julie Strickland