The agency tasked with overseeing mortgage activity at Fannie Mae and Freddie Mac recently announced new guarantee fees for lenders that conduct businesses with the GSEs in certain states. And home loans originated in New York could experience much higher costs than the others.
The Federal Housing Finance Agency plans to implement guarantee fees ranging between 15 and 30 basis points, which could cost borrowers a significant amount of additional money during the course of their mortgage. New analysis from Sarah Hu of the Royal Bank of Scotland believes the fees could cost borrowers in the Empire State another $100 in annual loan payments.
"Given that New York prepayment levels are already lower than many other states (due to its higher mortgage taxes), an additional 30 bps G-fee hike will further slow refinancing activity in the state," Hu said, according to HousingWire.
Although the increased fees have been mostly unpopular among both mortgage professionals and borrowers, they are still less expensive than costs associated with the private sector. However, the added fees could hinder activity among otherwise creditworthy borrowers, especially in New York, who find that leaving the terms of their loans the way they are more affordable.