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…will make even an FHA loan competitive.

The days of (relatively) cheap Agency (Fannie Mae/Freddie Mac) loans are over.

Mortgage Rates to Take Big Hit from Fee Hikes

The widespread fee hikes come as the Federal Reserve continues to purchase $40 Billion per month in Mortgage Backed Securities to boost the economy by supporting the recovering housing market. But the Fed is widely expected to begin reducing these purchases soon. Ironically, the time frame in which most economists see this happening is the same as the time frame in which the mortgage fee hikes will be rolled out.

This is a potentially debilitating one-two punch for many borrowers and it raises serious questions as to the unintended consequences of these ambitious fee hikes. The changes are set to go into effect for loans sold to the agencies beginning in April 2014. That means lender rate sheets may start adjusting for the new fees shortly into the new year.

The last time the ongoing fee was increased, some lenders adjusted rate sheets literally overnight and with little rhyme or reason as to the timing. The only known is that virtually all borrowers will soon face higher costs and rates, and a fragile housing recovery will deal with yet another major challenge.

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