WASHINGTON—The cost of refinancing government-backed home loans is expected to fall as mortgage giants Fannie Mae and Freddie Mac are set to drop a fee imposed last year in the midst of the Covid-19 pandemic.
A federal housing regulator said Friday that Fannie and Freddie will eliminate the 0.5% fee on mortgage refinancing starting Aug. 1. The fee, imposed in December, added about $1,400 to the cost of refinancing an average mortgage backed by the firms, according to an estimate from the Mortgage Bankers Association.
“The Covid-19 pandemic financially exacerbated America’s affordable housing crisis,” Federal Housing Finance Agency Acting Director Sandra L. Thompson said. “Eliminating the [fee] will help families take advantage of the low-rate environment to save more money.”Verify your mortgage eligibility (Jul 4th, 2022)
U.S. home prices over the past year have risen at the fastest pace in decades, as a shortage of homes on the market collides with soaring demand from prospective buyers. The situation has exacerbated concerns about housing affordability and ratcheted up pressure on the Biden administration to respond.
With interest rates low by historical standards, millions of Americans have also refinanced existing mortgages to reduce their monthly payments. But the fee charged by Fannie and Freddie eliminated a chunk of those savings for affected borrowers.
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