Freddie Mac raises refi rates .5%!

[kb2wji]

Freddie Mac just announced that all mortgage refi's will be charged an additional .5% due to the risks associated with COVID. What do you all think of this? Their reason does not pass the smell test with me. What do you guys think is the "real" reason? Slow down refi business to unclog the system? Simple money grab?

[zx10guy]

There was an announcement a couple of months ago that banks were artificially inflating interest rates due to high market demand. So nothing new and a money grab all around.

ETA: Fannie Mae is also doing this.

[Chihuahua]

Originally Posted by kb2wji

What do you guys think is the "real" reason?

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[RickFLM4]

If they are going to use the incremental fee to reduce the chances of needing the government to intervene later, fine by me. A lot of people requested and received forbearance (or just went delinquent) and economic forecasts are not great. So someone needs to pay for that increased risk. It shouldn’t last forever.

I also think it might put some pressure on rates offered by lenders because anyone who refinances should be comparing the total picture inclusive of fees and higher fees raises the bar on when it makes sense to refinance. If lenders want deal flow, they will need to make it worthwhile to borrowers. But there are a lot of variables so no way to know for sure.

[VisualEcho]

I don't really understand any of this, all I know is that I recently changed from 13 years @ 3.25% to 10 years @ 2.8%. Thank you COVID19, for the one thing you did right.

[F32Fleet]

Originally Posted by kb2wji

Freddie Mac just announced that all mortgage refi's will be charged an additional .5% due to the risks associated with COVID. What do you all think of this? Their reason does not pass the smell test with me. What do you guys think is the "real" reason? Slow down refi business to unclog the system? Simple money grab?

The GSE's package and sell mortgages to investors worldwide. It's plausible that investors are looking to be compensated for the additional risk of mass layoffs which have become common with CV19.

There's risk on the lender side as well as the terms surrounding loan repurchases have changed as well. Of course there's taxpayer risk because the GSE's have until recently low levels of capital.


On the plus side more loans are coming out of forbearance.

[David70]

Originally Posted by kb2wji

Freddie Mac just announced that all mortgage refi's will be charged an additional .5% due to the risks associated with COVID. What do you all think of this? Their reason does not pass the smell test with me. What do you guys think is the "real" reason? Slow down refi business to unclog the system? Simple money grab?

Do you have a link to the announcement, I searched and I can't find it.

Looks like replies above are also based on speculation and likely an article explains what and why they are doing it.

[F32Fleet]

Originally Posted by David70

Do you have a link to the announcement, I searched and I can't find it.

Looks like replies above are also based on speculation and likely an article explains what and why they are doing it.

It's official. WSJ is already reporting on it because Trump WH is "concerned" about the impact on affordability.

Lenders obviously aren't happy because it reduces their income potential (ability to churn borrowers who've already refinanced).

The rate actually appears to be a bump in the G-fee lenders pay.