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Published: Dec 01, 2020 5 min read

Refinancing a mortgage just got more expensive.

Starting today, Fannie Mae and Freddie Mac will charge a 0.5% “adverse market fee” on refinance loans. The fee will be incurred by lenders who sell loans to Fannie and Freddie, but those costs are sure to be passed on to borrowers — if they haven’t already.

“It’s likely that the lenders who are subject to that fee have already incorporated that into the pricing for their active application pipeline,” said PK Parekh, senior vice president of Discover Home Loans.

According to Parekh, some lenders may decide to absorb the fee, depending on the amount. Others may include the fee as part of the closing costs, which can already run between 2% and 5% of the loan amount. However, Parekh believes that “it’s probably likely that they are going to adjust the interest rate on the loan.”