This week, the Average Mortgage Rates in the US have finally been increased for the first time in three weeks on long-term mortgages. Though the rates on long-term mortgages (30 years) have been increased but it still remained at low levels i.e., below 3 per cent.
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Latest Mortgage Rates Data
On Thursday, the Latest Mortgage Rates data was released by Freddie Mac in which it was shown that the average rate on the 30-year home loan has been raised to 2.96 percent which was earlier set to 2.88 percent previous week. The rates have been increased with an average 0.8 point. However, last year, the average rate on long-term mortgages was 3.6 per cent. Though the average rates have increased but it still remained less than 3 per cent for four of the last five weeks.
The Freddie Mac is also known as Federal Home Loan Mortgage Corporation (FHLMC) which is basically a public government-sponsored enterprise (GSE) and is considered to be one of the largest United States corporations. It has been formed for expanding the secondary market for mortgages in the US. The Freddie Mac combining with the Federal National Mortgage Association, also known as “Fannie Mae”, mainly works in buying the mortgages on the secondary market, and then pools in order to sell them on the open market as a mortgage-backed security to their investors.
Mortgage Rates increase but remain below 3 Percent
This mortgage investor, Freddie Mac, sums the rates from about 80 lenders all around the US in order to come with the final decision of setting national average mortgage rates on a weekly basis. It generally uses the rates for high-quality borrowers who be likely to have strong credit scores as well as consist of large down payments. And that’s the reason that these rates are not accessible to each and every borrower.
In the meantime, the consumers have to now pay extra charges to refinance their mortgages after the announcement of Fannie Mae and Freddie Mac to raise the fees for lenders on their long term loans.
Fannie Mae Specially Quoted in a letter to the Lenders
However, these changes have been made in order to protect the two entities from the extra risk that has been raised due to the arrival of COVID-19 pandemic this year. Fannie Mae has specially quoted in a letter to the lenders that the market, as well as the uncertainty in the economy, has been resulted in the higher risk and costs.
On the other hand, an average of 15 years fixed-rate has been fallen to 2.46 per cent along with an average 0.8 point. Earlier, a week back, it was 2.44 % and last year it was 3.07%. Now, at the present date, the average on the five-year adjustable-rate has been held stable at 2.9% along with an average 0.4 point, a week back. A year back, it was 3.35%.
Increase in the Fees Only Charged On Mortgage Refinances
The price adjustment has now been adding 0.5 per cent of the amount of the loan to the consumer’s cost. This in turns sums up to $1,400 on the average mortgage that has been initiated at the present date. It is going to start in the month of September this year, and it also means that it is going to mainly apply to all the refinances that aren’t in the process by this time. This move has come across with strong disapproval from the mortgage industry. Moreover, the increase in the fees was only charged or imposed on the mortgage refinances and not on the loans that have been used for purchasing a home.
Later on, on Thursday, this move by mortgage-finance companies Fannie Mae and Freddie Mac has been also criticized by the Trump administration for charging a new fee on some mortgages. They said that these new charges would harm the consumers and have serious concerns regarding the same.
