Mortgage Monday – February 7, 2022
Mortgage rates are rising, refinances are all the rage, and older news is looming. Let’s cover it all in this week’s Mortgage Monday update!
Rates update
Last week, mortgage rates hit their highest level since October 2019 – but let’s backtrack a bit. For the week ending February 3, Freddie Mac actually reported generally stable rates from the average lender. Like many experts, they believe that our economic recovery after Omicron will result in price increases; what their weekly survey didn’t take into account, however, were last Friday’s market shifts.
On February 4, the US Bureau of Labor Statistics released its monthly jobs report for January. In short, things are looking up – there were significant increases in employment last month, even against Omicron – and markets were forced to react. A return to a better economy will also inevitably mean a return to higher rates, and mortgage rates rose last week already reflect this.
We will probably see Freddie PMMS make up for last week’s rate hike on Thursday. But for now, contact your Total Mortgage Loan Officer if you are considering buying or refinancing a home. Rates are rising faster than ever and should continue to do so, especially after the Fed’s recent hint of further hikes in March.
Refinances tend as rates rise
Because rates are rising, refinance numbers are up and trending. At the end of January, mortgage refinancing accounted for 57.3% of applications in the Mortgage Bankers Association Refinance Index. When rates rise, the window for refinancing at a lower price naturally closes; we expect the refi numbers to continue this trend through February until mortgage rates reach pre-pandemic levels.
In the meantime, our door is always open if you are looking to refinance. The opportunity to do so is certainly dwindling, so be sure to act quickly and contact us. Find your mortgage banker today!
Older, but still important news
The Federal Housing Finance Agency (FHFA) has announced upcoming fee increases for certain home loans from Fannie Mae and Freddie Mac. Effective April 1, 2022, the initial fees for these options will be increased as follows:
- Initial fees for high balance loans will increase between 0.25 and 0.75%.
- Initial costs for second home (non-primary residence) loans will increase between 1.125 and 3.875%.
These increases will ultimately depend on the loan-to-value ratio of each product. “High balance” loans are considered to be any that exceed the compliant base limit introduced on January 1 – more on that below.
Last month, borrowing limits for Conventional and Federal Housing Administration (FHA) loan options were significantly increased to help homebuyers combat rising market prices. The conforming limit for home loans for one unit is now $647,200, an increase of 18.05% over last year’s limit. To learn more about these changes and your new borrowing options, contact your Total Mortgage Loan Officer.
In conclusion
So far, 2022 has shown us how reactive markets (and mortgage rates) can be. In just a few months, rates have gradually reached their highest in years, which means that the historical lows that we were accustomed to are now behind us. If home ownership is one of your goals for the year, it would be best to act as soon as possible. Contact us anytime to get started!
As always, we’ll continue to monitor mortgage rates, industry news and more to keep you informed. Enjoy the rest of your week!
