An Unexpected Surprise…

  • December 23, 2013

unexpectedtoonHolidays are usually full of surprises, call it Christmas magic. Friday the bond market experienced an unexpected Christmas surprise when Mel Watt announced he would delay the G-Fee increase that was scheduled to go into effect April 1st. Remember, these fees are directly passed along to you, the consumer, in your monthly mortgage payments.

  • Interest rates increased steadily last week as almost every economic indicator beat economists’ forecasts. GDP grew at its fastest pace in almost two years and housing starts rose 23% month over month; the highest levels since 2008. The economy is growing and it’s not from eating too many cookies.
  • Late Friday, Mel Watt, the new director of the FHFA, put the increase of the LLPAs on hold and will reevaluate its implementation. The market bounced back as investors digested the news. Could this really be happening? Maybe Santa does exist after all.
  • Don’t get your hopes up that this fee increase is canceled; it’s just put on hold for now. Hopefully we will get direction from the FHFA soon. If you are looking at buying a home soon, there is still time to lock in lower pricing. Consider it an after Christmas sale!

This week is slow due to the holiday. The market is closed Wednesday and investors are all on vacation. That means markets could be more volatile and rates could start to jump around. Fear not, that should subside in the New Year.

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