What happened to rates this week?
The average rate for a 30-year fixed-rate mortgage jumped from 2.88% on Monday to 3.03% the following day — and ended the week on Friday at 3.04%, according to Mortgage News Daily's survey of lenders.
"Any lender making a loan for a conventional 30-year fixed refinance will have to account for this fee, and most of them will be doing that before the end of this month (a majority already have as of this week)," writes Matthew Graham, chief operating officer of Mortgage News Daily.
Rates have gone up across the board, even though the new 0.5% surcharge applies only to refi loans. It was first announced in mid-August by Fannie Mae and Freddie Mac, giant government-controlled companies that buy or guarantee most U.S. mortgages, and at the time they said the fee would start Sept. 1.
Lenders were rattled, and reacted by raising mortgage rates sharply. Rates cooled off in late August when the fee was put on hold for a few months.
But now they've gone back up as lenders have started factoring in the fee again. Why so early, when the new start date isn't until December?
"A recent wave of borrower demand has extended the turnaround time on loans for many lenders, leading some to apply the price adjustment sooner than they may have previously anticipated," Zillow's Speakman explains.
Backlogged lenders are allowing themselves plenty of time to process and close loans that they'll sell to Fannie and Freddie in late fall, when the companies will be applying the fee.
How you can still score a low rate
Some lenders are in no hurry to bake the new fee into their rates, including United Wholesale Mortgage, America's second-largest home lender after Quicken Loans.
"I said the earliest would be Oct. 1, but I don’t think it’s going to be that because we’re closing in 17 days, 15 days, 12 days," UWM's CEO Mat Ishbia told HousingWire.
Ishbia's company is still advertising a 30-year fixed-rate mortgage available for purchases and refinances with rates as low as 2.5%.
Should borrowers race to snap up the cheap mortgage rates before they're gone?
"It's never good to rush into a choice — especially with your mortgage," says Dan Green, founder and CEO of the mortgage lender Homebuyer. "That said, if you made your choice, commit to your lender immediately. Maybe you'll squeak in before the adverse market fee shows up in your price."
To find a rock-bottom rate, go online and gather mortgage offers from at least five lenders — so you'll have a good shot at turning up the lowest rate available in your area and for someone with your credit score.
That sort of comparison shopping works well for finding the best rate on homeowners insurance, too.
Danny Frio, branch manager at Preferred Rate in Oakbrook Terrace, Illinois, says he's advising clients "not to wait, and lock in now" — though not because of the fee.
Frio says mortgage rates may start moving after November, because of two big question marks: "1.) Coronavirus, with the addition of flu season on the horizon; and 2.) The election."