New Guarantee Expected to Raise Mortgage Interest Rates

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The following blog entry is written by guest author, Rachel Bernstein of the Baker Loan Team of Guarantee Mortgage:

On April 1, 2012, a guarantee fee will be added to all new residential loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).  This new fee will impact interest rates on these loans by roughly .125% which is nominal and in the long run I don’t think it will make a huge impact.  However,  it is a tough economy and real estate market right now so this is not the kind of stimulus I would have hoped for.  The Fed also announced this week that they are going to keep interest rates low through 2014 which means that the economy is still weak (which I think we all know!).


This additional fee is being driven by a cut in Social Security taxes also known as the Temporary Payroll Tax Cut Continuation Act.  The Temporary Payroll Tax Cut will cost roughly $33 billion dollars and the Guarantee Fee will help repay for the cost of the tax cut.


If you are interested in finding out if your loan might be effected, or if you want to avoid paying an extra .125% on your loan please do not hesitate to contact me.

Rachel Bernstein helps buyers and owners of Residential and Commercial property get and refinance loans.  Email her at rachel at rsbloan dot com or phone her at 415-298-1089.  (DRE #01453342 NMLS# 306889)