San Diego Mortgage News Alert: Agency Adverse Market Adjuster in 2021
In this video I break down what happened earlier this week, late on Wednesday, that cost everyone looking to get a conventional loan refinance, up to $3500 immediately, and how I predict it will affect anyone getting a mortgage loan from today on. (Please note: Due to backlash, this was delayed some, going into affect in December, however most lenders are adding to submissions starting September/October).
Have you heard of the "agency adverse market adjuster?" I suspect not, but it's so important I wanted to create a quick video, and post about it, and how it affects you.
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Without further ado - let's get into what the "agency adverse market adjuster" is...
Late on Wednesday afternoon mortgage giants Fannie Mae and Freddie Mac announced they are raising fees for all lenders (cough borrowers) on all mortgage refinances - this went into effect essentially immediately.
The price adjustment adds 0.5% of the loan amount to the cost of the loan.
Just how much is that you ask?
Let's see some breakdowns on loan amounts:
$300,000 x 0.5% = $1,500
$400,000 x 0.5% = $2,000
$500,000 x 0.5% = $2,500
$600,000 x 0.5% = $3,000
$700,000 x 0.5% = $3,500
Just like that, immediately, and moving forward, your mortgage loan fees just went up.
Why did they do it?
Something I have talked about for quite some time - when there are risks in the market - like the current Covid 19 pandemic, lock downs lasting for months, and record high unemployment.
Costs go up.
Let's remember - they are the banks - they control everything.
Currently, this is just for Fannie Mae and Freddie Mac refinances - but, I expect this soon to trickle down to purchases, and then possibly all other major loan types as well - such as:
What should you do now?
Here's some thoughts.
If you have been on the fence about doing a refinance - whether to simply drop your rate or get cash out - I would do that now.
Anybody that thinks they can time the mortgage markets, to get lower and lower rates, might be in for a rude awakening with constant mortgage changes.
If you have been on the fence to buy a home, especially if you are looking to get a mortgage loan, I would act sooner rather than later.
One of the major San Diego housing trends I mentioned in a previous video is very much coming into fruition - and that's lower and lower inventories as summer is winding down, kids start home schooling, and we enter the next phase of Covid 19 lock downs, and arguably the most volatile elections in recent memory.
As mentioned in my latest San Diego real estate stats covering through the end of July - San Diego's inventory is down over 80% and we are at our lowest levels of homes for sale in San Diego going back well over 16 years.
What do you think?
I would love to hear your thoughts.
Leave me a comment below – or, contact me here.
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