Budget Deal Pushes Rates Up in April

I hope you had an enjoyable holiday.

Do remember the budget battle the President and Congress had over the holidays? If you recall, the President wanted to extend the expanded unemployment benefits (now at 99 weeks) and continue the payroll tax cuts (currently at 4.2% but it was set to expire and go back to 6.2%) but congress refused to extend as it would increase the deficit.

They eventually reached a deal… I seem to recall it was on the 23rd of December. The deal was that they would continue the emergency unemployment benefits and the payroll tax cut for 2 months and it would be paid for by increasing the insuring fee on Fannie Mae and Freddie Mac mortgages.

What is the insuring fee? It’s a fee that Fannie and Freddy charge backs to insure their loans. How much will it increase? .1% How will this affect interest rates on Fannie Mae and Freddy Mac loans in the future? They will go up by .1%.

Hopefully the downward trend in rates will absorb this.