Applications for mortgages jumped 23 percent last week, largely due to homeowners taking advantage of record-low rates to refinance, according to the Mortgage Bankers Association. The refinance portion of total mortgage activity was 82 percent.
But as a Bankrate article points out, although rates are low, mortgage fees are about to rise. Congress is set to increase the guarantee fee on loans that can be sold to Fannie Mae and Freddie Mac by a minimum of 10 basis points. The increase won't take effect until April 1, but many lenders are already starting to pass on the increase to borrowers because they don't want to be stuck if the loan takes 45 days or more to close. Borrowers who act quickly to lock in a rate for 30 days may be able to avoid the extra fee.
The housing market is slowly showing signs of improvement with the increased activity, but there's still some debate about whether it has bottomed out. Jamie Dimon, CEO of JP Morgan, told CNBC a week ago that the market hit bottom, while Timothy Sloan, CFO of Wells Fargo, said it's unclear if that has happened yet.
According to CNBC, Wells Fargo, the largest originator of home loans, saw its mortgage banking income increase to $2.4 billion in the fourth quarter of 2011, up from $1.8 billion in the third, but down from $2.8 billion a year ago. The increase in the fourth quarter is attributed to a rise in refinancing.
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