Mortgages get more expensive
It's time to kiss extra-low mortgage rates goodbye.
Several factors will put upward pressure on rates in the next few months, including the Federal Reserve's recent decision to scale back on its bond-purchasing stimulus program.
Higher mortgage fees on Fannie Mae and Freddie Mac loans also will make mortgages more expensive in 2014, as they will result in higher rates for borrowers, says Brian Koss, executive vice president for Mortgage Network in Danvers, Mass.
The fee hike could affect many borrowers because Fannie and Freddie own or guarantee about two-thirds of new mortgage loans.
With the higher fees, even borrowers with credit scores above 740 would pay more for mortgages, regardless of the size of their down payments. In addition, Fannie and Freddie have plans to raise the fees they charge lenders, which will translate into higher mortgage rates for consumers.
Mel Watt, the incoming director for the Federal Housing Finance Agency, which oversees Fannie and Freddie, says he will delay the implementation of higher fees, but has not offered details on when they could go into effect.
"It doesn't make sense to add additional barriers now that the market is healing," says Lawrence Yun, chief economist at the National Association of Realtors. Still, he says buyers should act quickly if they are ready to make a commitment now.