Daily Newsletter: Second Home/High Balance Mortgage Costs Rise

Fannie Mae and Freddie Mac, the government sponsored enterprises (GSE’s) that guarantee most US mortgages, announced substantial increases in the fees (aka Loan Level Pricing Adjustments or LLPAs) they charge on second home and “high balance” mortgages Wednesday. (HERE and HERE). The new costs are effective for loans securitized on/after April 1, meaning borrowers will see them added within weeks (even for loans closing well before April 1!). The largest impact is to loans for second/vacation homes. Just how much will the changes cost buyers? Previously, there were no separate 2nd home pricing adjustments for our scenario, today’s announcement means these loans will soon carry a hefty 1.125 to 4.125% pricing adjustment ! The irony here is that Fannie/Freddie instituted caps on investment property/2nd home loans last spring, limiting them to 7% of the loans they purchased. Those caps drove rates on rental/2nd home loans up dramatically for several months before the agencies removed them in September, a move cheered by buyers/realtors/lenders. Today’s announcements put 2nd home mortgages effectively in the same pricing range as investment property loans, albeit with slightly lower adjustments for down payments of 30%+. LLPAs ostensibly account for loans’ varying default risk, including factors such as credit scores, equity, loan purpose, and property type. Effectively stating (by charging almost identical LLPAs) that 2nd homes have similar default risk to investment properties is quite a change, given that until now, 2nd home loans were priced similarly to those on primary residences.

January 10, 2022 Housing News Second Home/High Balance Mortgage Costs Rise Fannie Mae and Freddie Mac, the government sponsored enterprises (GSE’s) that guarantee most US mortgages, announced substantial increases in the fees (aka Loan... (read more) Housing News Second Home/High Balance Mortgage Costs Rise Fannie Mae and Freddie Mac, the government sponsored enterprises (GSE’s) that guarantee most US mortgages, announced substantial increases in the fees (aka Loan Level Pricing Adjustments or LLPAs) they charge on second home and “high balance” mortgag... (read more) Housing News Rate Lock Volume Fell Across the Board in December Mortgage origination activity as measured by rate locks declined again in December. Black Knight’s Mortgage Originations Monitor said it marked the fourth con... (read more) Housing News Rate Lock Volume Fell Across the Board in December Mortgage origination activity as measured by rate locks declined again in December. Black Knight’s Mortgage Originations Monitor said it marked the fourth consecutive month for the trend. Rate locks for the month were down 35 percent compared to D... (read more) Rob Chrisman Secondary, Processing, Referral, Automation Tools; B2B Lawsuits Update; NFP Comes in Low Anyone born around this time is a Capricorn, and if you believe in horoscopes, they are the most patient and careful, and they are down-to-earth for everything.... (read more) Rob Chrisman Secondary, Processing, Referral, Automation Tools; B2B Lawsuits Update; NFP Comes in Low Anyone born around this time is a Capricorn, and if you believe in horoscopes, they are the most patient and careful, and they are down-to-earth for everything. The broad stroke feature of them is adamancy: they tend to hold on to their own views and... (read more) Mortgage Rates Mortgage Rates Spiking at Fastest Pace in a Long Time Last week wasn't a great one for mortgage rates. Most lenders were roughly a quarter of a point higher on a conventional 30yr fixed scenario by Friday. This morning's additional weakness in the bond market brings the average conventional 30yr fixed scenario closer to 3.625% (as always, rate quotes depend on multiple factors, and the overall ran... (read more) 30 Yr. Fixed Rate 3.64% +0.14% Rate Change Points Mortgage News Daily 30 Yr. Fixed 3.64% +0.14 0.40 15 Yr. Fixed 2.87% +0.10 0.40 30 Yr. FHA 3.25% +0.15 0.00 30 Yr. Jumbo 3.29% +0.03 0.00 5/1 ARM 3.82% +0.02 0.50 Updates Daily - Last Update: 1/10 15 Yr. Fixed Rate 2.87% +0.10% Rate Change Points Freddie Mac 30 Yr. Fixed 3.11% +0.06 0.70 15 Yr. Fixed 2.33% +0.03 0.70 5/1 Yr. ARM 2.41% +0.04 0.50 Updates Weekly - Last Update: 12/30 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 3.33% +0.02 0.48 15 Yr. Fixed 2.60% 0.00 0.31 30 Yr. Jumbo 3.31% -0.04 0.38 Updates Weekly - Last Update: 1/5 MBS / Treasuries MBS Live Recap: A Glimmer of Resilience and a Primer on Which MBS Coupon to Watch A Glimmer of Resilience and a Primer on Which MBS Coupon to Watch Bonds began the day by resuming the selling trends seen at the end of last week. MBS hit new long-term lows and 10yr yields just barely tagged higher levels than last Friday before buyers stepped in to stop the bleeding. It's definitely too... (read more) UMBS 30YR 3.0 102.64 -0.17 Price / Yield Change MBS UMBS 3.0 102.64 -0.17 UMBS 3.5 104.78 -0.19 GNMA 3.0 102.56 -0.19 GNMA 3.5 103.48 -0.19 Pricing as of: 1/10 5:21PM EST 10 Year US Treasury 1.7621 -0.0034 Price / Yield Change US Treasury 2 YR Treasury 0.898 +0.028 5 YR Treasury 1.520 +0.017 7 YR Treasury 1.703 +0.004 10 YR Treasury 1.762 -0.003 30 YR Treasury 2.093 -0.024 Pricing as of: 1/10 5:21PM EST Latest Video The 9am Bond Report - January 10, 2022 Here's how homebuilders will fare in 2022 The consumer balance sheet has never been in better shape, says Jamie Dimon We should be normalizing Fed policy, says Stephanie Link Around the Web CNBC Mortgage rates just jumped again. Here's what that means if you're buying a home CNBC Jamie Dimon sees the best economic growth in decades, more than 4 Fed rate hikes this year Reuters Powell, Brainard hearings may spotlight inflation risks, broader Fed debates Calculated Risk Blog Six High Frequency Indicators for the Economy Calculated Risk Blog Housing Inventory January 10th Update: Inventory Down 0.5% Week-over-week; New Record Low CNBC Goldman predicts the Fed will hike rates four times this year, more than previously expected Calculated Risk Blog 2nd Look at Local Housing Markets in December Reuters Lawmakers urge U.S. Treasury's Yellen to back review of IMF surcharges Reuters U.S. wholesale inventories rise strongly, seen boosting Q4 growth Calculated Risk Blog Rents Still Increasing Sharply Year-over-year Reuters Analysis-Surging benchmark Treasury yields in reach of 2% on hawkish Fed, inflation fears Calculated Risk Blog Q4 GDP Forecasts: Moving Down Calculated Risk Blog Hotels: Occupancy Rate Down "Slightly" Compared to Same Week in 2019

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