Fannie & Freddie Refi Rates

[Gordon Ray]

https://www.cnbc.com/2020/08/13/mortgage-refinancing-more-expensive-as-fannie-mae-freddie-mac-raise-fees.html

How do y'all see this new fee affecting your deal analysis for your BRRRR investments?

[Chris Mason]

The media gets dollars for clicks, always remember. This creates an incentive structure to spaz the hell out over any little thing.

So refis lost 50 bps. Let's contextualize that. I track a couple lenders closely, the ones I most commonly use -- I track live pricing for realistic deliverable scenarios representative of my market, not whimsical fake scenarios featured on internet mortgage ads.

Yesterday to today change. Rounded to the nearest 5 bps, b/c who cares about 0.01% of your loan balance in closing fees holding constant the rate (100 bps = 1% to fees, holding constant the rate).

#1) Lost 25 bps. So pricing actually improved enough that half of this change was absorbed by pricing improvements. 

#2) Improved about 10 bps. Meaning they actually improved 60 bps, but 50 went away to this new adjustment. 

It's a statistical blip. I cannot foretell what the future will bring, but it literally took a single evening for this to be half absorbed by one lender, and fully absorbed by another, based on market conditions, etc. And these aren't random fly-by-night lenders I track, they're stalwart reliable go-tos, one a little better for owner occ, one a little better for rentals.