Refinances have been seeing a boom in 2020 with refinance applications up by 47% from the same time last year. This boom has been largely fueled by a significate drop in interest rates resulting from fiscal initiatives to combat the effect of the pandemic’s effect on the economy.

Now market forces look to be slowing this trend upward. Rates have been steadily rising since their historic lows over the summer. Moreover, a new fee announced by Fannie Mae and Freddie Mac is set to increase the cost of refinancing to the consumer. A new .5% Adverse Market Refinance Fee is now set to take effect December 1, 2020, and consumer advocacy groups are predicting this increase will be largely passed on to consumers. This fee only applies to refinancing what are known as conforming loans with balances over $125,000 that meet the Federal Housing lending guidelines. If you’re refinancing a jumbo loan or a government-backed mortgage, like a VA loan or a FHA loan, this extra fee likely won’t apply. But the majority of refinance loans will become more expensive and lenders will be obligated to pay this new fee on any refinanced mortgage sold to Fannie Mae or Freddie Mac after it goes into effect.

Through the end of November into December, those already in the refinance process should pay close attention to when their rate lock expires. Lenders will not be so willing to extend rate locks with the prospect of having to absorb this fee. Even with the increased cost of refinancing it could still be a smart move. Its always a good idea to shop around and explore your best options.

To learn how we can help, please visit