As expected, the Fed increased policy rates by a quarter percent at their June meeting. They surprised us by saying they will likely raise rates two additional times this year, where we had previously expected just one more hike in 2018. Please read on for more:

Remind me—who is the Fed?

The Federal Reserve Board (the Fed), controls the Fed Fund Rate and the Discount Rate. These are charges for overnight loans from bank to bank or from the Fed to member banks.

What does an increase mean for regular people?
• It could cause banks to increase their “prime rates,” which are often used to calculate interest on consumer products like credit cards, private student loans, and home equity lines of credit (HELOCs). Adjustable Rate Mortgages (ARMs) may be directly impacted as well.
• Fixed mortgages are typically based on long-term rates, which are not directly affected by Fed rate changes. However, Fed policy does influence mortgage rates, which can rise in anticipation of future Fed action. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time. 

The Federal Housing Finance Agency announced Thursday that it is extending the Home Affordable Refinance Program(HARP) through the end of 2018. The program was set to expire Sept. 30.

HARP was initiated in 2009 to help underwater and near-underwater homeowners refinance their mortgage. Since then, the plan has been extended past its intended expiration several times. In 2015, it was extended to the end of 2016. In 2016 – despite FHFA Director Mel Watt’s warning that the program wouldn’t last forever – it was extended until Sept. 30, 2017, in order to serve as a “bridge” to a new refinance program the FHFA planned to launch in October of 2017.

According to the FHFA, HARP is being extended again because of modifications to its High LTV Streamlined Refinance Program, which was created for borrowers who are current on their mortgage but unable to refinance because their loans’ LTV ratios exceed the maximum limits of Fannie Mae and Freddie Mac. The FHFA said it was extending HARP to “ensure that high LTV borrowers who are eligible for HARP continue to have a refinance option.”

“More than 143,000 homeowners could still benefit from refinancing through HARP,” the FHFA said.

You can continue reading more about the extension here. 

Want to know what the extension means for you? 

Contact us to discuss your situation with one of our loan officers. 

As expected, the Federal Reserve announced today that it would raise interest rates by a quarter of a percent.

“In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent,” the Federal Open Market Committee said in a statement. “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.”

The hike marks only the third time in a decade the Fed has raised its benchmark interest rate. The last hike came in December.

This article originally appeared on Mortgage Professional America. Click here to read more. >

This article was originally published at Mortgage News Daily. Copyright: Mortgage News Daily.

The annual premium paid by borrowers on mortgages backed by the Federal Housing Administration (FHA) is going down by a quarter of a percent.  Housing and Urban Development (HUD) Secretary Julian Castro announced today that the annual mortgage insurance premium (MIP) will be reduced 25 basis points for most new mortgages with a closing date on or after January 27.  The reduction is expected to save new FHA insured homeowners an average of $500 this year.

A HUD press release said today's announcement reflects the fourth straight year that FHA's Mutual Mortgage Insurance Fund (MMIF) has strengthened.  It has gained $44 billion in value since 2012 and last year alone grew by $3.8 billion.  The fund now stands at 2.32 percent of all FHA insurance in force, the second consecutive year that it has exceeded the 2 percent capital reserve mandated by Congress.  The fund reached near insolvency during the housing crisis, prompting several increases in both the upfront premium and the annual one. 

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