September 4th, 2012 1:00 PM by Lori Speight
The Federal Housing Finance Agency (FHFA) announced that mortgage giants Fannie Mae and Freddie Mac will increase — by an average of 10 basis points — the fees they charge lenders to guarantee loans.
The fee increases are expected to be passed along to borrowers, possibly with higher interest rates, Bloomberg reports. However, banking trade groups say any increases should be minimal and shouldn’t hurt mortgage lending.
For example, a rise of 10 basis points could potentially cost a borrower with a $200,000 mortgage about $4,000 over the term of a 30-year loan, Bloomberg reports.
“It’s obviously going to have a small impact on pricing, but given that mortgage rates are the lowest they’ve ever been, we think it’s probably the right time to do it,” Joseph Pigg, vice president at the American Bankers Association, told Bloomberg.
The purpose behind the fee increase was to increase the financial stability of the two mortgage giants as well as start decreasing their stake in in the mortgage market, says Edward J. DeMarco, FHFA acting director.
Fannie Mae and Freddie Mac own or guarantee about 60 percent of all mortgages in the U.S.
Source: “Fannie Mae, Freddie Mac Guarantee Fees Boosted by Regulator,” Bloomberg (Sept. 1, 2012)