Mortgage Refi Rates Drop Quickly After Federal Regulators Stop Charging Fee Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Alex Potemkin/Getty Images July 19, 2021 Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. That was fast. On Friday morning, . And by Friday afternoon, were falling. Some lenders slashed rates on 15-year fixed-rate loans to less than 2 percent, and they dangled deals on 30-year refinances of well below 3 percent. The moves might rekindle a refinancing boom that was in full swing earlier this year. The Federal Housing Finance Agency in December imposed a 0.5 percent “adverse-market fee” on mortgage refinances. When the agency announced it was eliminating the fee on loans that close Aug. 1 and after, quickly dropped their rates. The move was captured in rates clicked on by Bankrate users. On Friday, the average rate for refinances was 2.52 percent, down 4 basis points from Thursday. Before the announcement, rates in general had been falling, with the down to its lowest point since February. Big players such as United Wholesale Mortgage — the nation’s No. 2 originator of home loans — dropped their refi rates almost instantly on news of the FHFA move, says Jim Sahnger of C2 Financial Corp. in Jupiter, Florida. “People are benefitting,” Sahnger said. “I’ve had several borrowers move forward on the news.” The fee of 0.5 percent of the amount of a refinance was paid by lenders rather than borrowers. In response, lenders last year boosted refi rates by about 12.5 basis points, or 0.125 percentage points. Why some lenders cut rates so promptly
Consumers are accustomed to seeing prices and rates of all types rising quickly and falling slowly. In the case of the FHFA fee, that pattern didn’t hold. The reversal was swift for a couple of reasons. First, refi volume has lagged in recent months, even after lenders staffed up for a wave of refinancing. And second, the rate cut essentially takes effect immediately, given the long lead time for the mortgage process. “Most loans locking now won’t close until after Aug. 1,” says Rocke Andrews, broker-owner at Lending Arizona in Tucson. There’s also the reality that many lenders are vying for your business. “Let’s be honest — it’s an incredibly competitive market right now,” said Robert Humann, chief revenue officer at Credible.com. What ending the refinance fee means for borrowers
Borrowers didn’t pay the fee directly. Instead, lenders usually boosted rates by an eighth of a percentage point, or about $20 a month on a $300,000 loan. “Santa Claus has come early for homeowners looking to ,” says Greg McBride, CFA, Bankrate chief financial analyst. FHFA oversees Fannie Mae and Freddie Mac, the mortgage giants that buy about two-thirds of all U.S. home loans. Fearing a repeat of the foreclosure crisis of the Great Recession, the agency imposed the fee during the darkest days of the coronavirus pandemic. However, the FHFA’s move generated intense criticism. As a compromise, the FHFA delayed the fee for a few months, and said it wouldn’t apply to loans of less than $125,000. While regulators were bracing for a housing crash, the opposite happened: Home prices have soared, and foreclosures have fallen to record lows. The fee was championed by Mark Calabria, who had been appointed head of the FHFA during the presidency of Donald Trump. Calabria argued that the mortgage giants were “.” “In their current condition, Fannie and Freddie will fail in a serious housing downturn,” Calabria said last year. Calabria no longer is in charge. McBride welcomed the end of the refi fee. “The justification for the fee when it was sprung on the market was that it was necessary to pay for the costs of and pandemic-related payment relief incurred by Fannie Mae and Freddie Mac,” McBride says. “But the homeowners punished were those that weren’t high risk, weren’t in need of forbearance or payment relief and were in fact reducing their risk to the mortgage finance marketplace by reducing their rates and monthly payments. It never passed the smell test to begin with.” Learn more
SHARE: Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. Related Articles