Time to Refinance?
Boston Condos for Sale
Time to Refinance?
After surging over 8% in October, mortgage rates are falling back toward 7% again, and that is jump-starting the refinance market.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.17% from 7.37%, with points dropping to 0.60 from 0.64 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association. That was the lowest level since August.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” said Joel Kan, MBA vice president and deputy chief economist. “Refinance applications saw the strongest week in two months and increased on a year-over-year basis for the second consecutive week for the first time since late 2021.”
The actual level of refinance demand, however, is still quite low, given that so many borrowers refinanced in the first years of the Covid pandemic, when rates hit more than a dozen record lows.
Source: CNN Real Estate
Ford Realty Beacon Hill – Condo for Sale Office
Boston condos for sale – Ford Realty Inc
Updated: Boston Condos for Sale Blog 2023
Byline – John Ford Boston Beacon Hill Condo Broker 137 Charles St. Boston, MA 02114
__________________________________________________________________________________________________________________________________________________________
Time to Refinance? Homeowners looking to refinance their mortgages could soon have an easier time getting a lower rate, with Fannie Mae and Freddie Mac’s federal regulator eliminating a 50-basis point refinancing fee that was intended to help the mortgage giants cover at least $6 billion in anticipated losses due to the pandemic.
The vast majority of borrowers with mortgages backed by Fannie and Freddie have exited forbearance, and the success of COVID relief programs has “reduced the impact of the pandemic and were effective enough to warrant an early conclusion” of the fee, the Federal Housing Finance Agency said in an announcement.
The FHFA has instructed Fannie and Freddie to stop collecting the fee on loans it purchases or guarantees starting Aug. 1, 2021. FHFA Acting Director Sandra Thomson said the agency expects lenders will pass cost savings along to borrowers.
“The COVID-19 pandemic financially exacerbated America’s affordable housing crisis. Eliminating the Adverse Market Refinance Fee will help families take advantage of the low-rate environment to save more money,” Thompson said in a statement.
Many lenders were passing the fee — equal to $500 for every $100,000 refinanced — along to borrowers in the form of higher interest rates or up-front fees. For a borrower refinancing a $280,240 mortgage — 80 percent of the median home price in May of $350,300 — the fee totaled about $1,400.
Greg McBride, Bankrate’s chief financial analyst, said cancellation of the fee could be a win for borrowers, but lenders may see it as an opportunity to pad their profit margins, which have been squeezed by low rates and heated competition. That means it’s important to check rates with multiple lenders when looking into refinancing, he said.
“Repealing this ill-conceived and misappropriated fee is a win for borrowers and lenders alike,” McBride said in a statement. “Some of the savings will make it into the pockets of consumers but how much the borrower sees will be dependent on shopping around for the best deal.”
To provide relief during the pandemic, Fannie and Freddie were allowed to offer borrowers forbearance, modify mortgage terms to reduce monthly payments, provide protections for tenants in properties in forbearance, and provide loan processing flexibility.
Last summer, the FHFA said it expected COVID relief programs would cost Fannie and Freddie at least $6 billion, including:
- $4 billion in loan losses due to projected forbearance defaults
- $1 billion in foreclosure moratorium losses
- $1 billion in servicer compensation and other forbearance expenses
But by April, the percentage of single-family mortgages guaranteed by Fannie and Freddie that were in forbearance fell to 2 percent, down from a high of 5 percent in May of 2020.
“FHFA will continue to monitor the housing finance system, making policy adjustments in coordination with [Fannie Mae and Freddie Mac] as necessary,” the agency said today.
Boston Condo Refinancing FAQ
Are refinancing fees being eliminated?
Yes, Fannie Mae and Freddie Mac’s federal regulator eliminating a 50-basis point refinancing fee that was intended to help the mortgage giants cover at least $6 billion in anticipated losses due to the pandemic.
When does the elimination of the refinancing fees take place?
The FHFA has instructed Fannie and Freddie to stop collecting the fee on loans it purchases or guarantees to start Aug. 1, 2021.
How much were borrowers being charged on refinancing fees?
Many lenders were passing the fee — equal to $500 for every $100,000 refinanced — along to borrowers in the form of higher interest rates or up-front fees. For a borrower refinancing a $280,240 mortgage — 80 percent of the median home price in May of $350,300 — the fee totaled about $1,400.
Boston Condos for Sale
______________________________________________________________________________________________________________________________________________________________
Refinancing activity plummeted last week while applications to purchase homes remained flat — and substantially higher than a year ago.
An index tracking the volume of mortgage applications to buy homes each week, known as the purchase index, fell 0.4 percent, seasonally adjusted, from the prior week.
The metric, from the Mortgage Bankers Association, was up 33 percent year-over-year, however, marking the 14th consecutive week of annual gains.
Year-over-year growth
The year-over-year growth in applications to buy homes reflects a broad surge in demand. In July, existing home sales jumped with the median price hitting a new high of $300,000. Homebuilding also spiked — so much so that it drove up lumber prices.
An MBA index that tracks applications to refinance fell by an adjusted 10 percent compared to the second week of August, though it remained up 34 percent year-over-year.
Real Estate Refi-Index
The refi index’s fall comes as Freddie Mac and Fannie Mae’s new refinancing fee looms. The government agencies announced this month they will begin charging lenders 0.50 percent on refi loans, which MBA estimates will add $1,400 to the average homeowner’s bill. The fee was initially scheduled to take effect in September but the Federal Housing Finance Agency on Tuesday delayed implementation to December.
Boston Real Estate Mortgage Rates Still Low
The average 30-year, fixed-rate mortgage fell to 3.11 percent from 3.13 percent for conforming loans. Jumbo rates were unchanged at 3.41 percent.
Because of the drop in refi activity, MBA’s index of all mortgage applications fell by a seasonally adjusted 6.5 percent from the prior week. Refinancing applications made up nearly 63 percent of the surveyed loans.
MBA’s weekly survey of mortgage applications, which dates back to 1990, covers 75 percent of the U.S. residential mortgage market.
Boston Condos for Sale
