Fed's QE3 Should Soften G-fee's Impact
Gumbinger expects that there could be downward pressure of as much as 25 basis points on rates because of QE3. In case originations slow down to the extent that the Fed controls a larger share of the market, there could be an even bigger impact on rates.
Credit is more of an issue
For the week ending September 28, HSH.com's weekly mortgage rates survey found that the average rate on a conforming 30-year fixed-rate mortgage was down to 3.50 percent. As of Monday, October 1, that average fell to 3.41 percent.
But as Gregg Busch, vice president with First Savings Mortgage Corp. in McLean, Va., points out, at this point it is not so much about interest rates as it is about access to lending.
"Until underwriting guidelines loosen up a little bit more, the housing market will just continue slowly and gradually improving," says Busch. "Lenders have tightened up their guidelines considerably. So right now I don't see 3 percent interest rates being any better than 3.5 percent because people just can't get mortgages."
Borrower optionsFor borrowers who would like to avoid any impact as a result of the upcoming g-fee hike, one option might be to turn to portfolio lenders. These lenders, such as banks that don't sell their loans to Fannie Mae and Freddie Mac, will not be impacted by the g-fee hike.
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