The cost of new mortgages is going up as Fannie Mae has added a new up-front charge to the loans they purchase or guarantee.
Fannie Mae, the giant government-sponsored mortgage investor, last week raised costs for many borrowers by quietly adding a 0.25% up-front charge on all new mortgages that it buys or guarantees. On a $400,000 mortgage, that would mean an extra $1,000 in fees, almost certain to be passed on to the consumer. Freddie Mac, the other big government-sponsored mortgage investor, is expected to impose a similar fee soon, according to a person familiar with the situation. via the WSJ.com
It looks like the cost of lending is starting to be felt by the consumers as the lending institutions try to reclaim some of their losses. Smart business and the consumer will not notice too much if rates continue to drop. It will make it harder for originators as they will have another fee to work into their loan package.
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