The Federal Housing Finance Agency (FHFA) today issued its annual report on single-family guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises). Guarantee fees are intended to cover the credit risk as well as administrative and operational costs that the Enterprises incur when they acquire single-family loans from lenders. In particular, the report provides an analysis of product type, risk class, and lender delivery volume which provides a comparison to the prior year.
The report discusses the guarantee fees charged in 2021 and provides a four-year perspective with the data back to 2018. Significant findings in the report indicate:
- For all loan products combined, the average single-family guarantee fee increased by 2 basis points to 56 basis points in 2021. The upfront portion of the guarantee fee, which is based on the credit risk attributes (e.g., loan purpose, loan-to-value ratio, and credit score), increased by 2 basis points to 13 basis points on average in 2021.
- The average guarantee fee in 2021 on 30-year fixed rate loans rose by 1 basis point to 59 basis points, while the average guarantee fee on 15-year fixed rate loans rose by 6 basis points to 42 basis points. Fifteen-year loans were disproportionally affected by the adverse market refinance fee because 15-year loans were more likely to be refinance loans. This fee was eliminated on Aug. 1, 2021.
The Housing and Economic Recovery Act of 2008 requires FHFA to conduct ongoing studies of the guarantee fees charged by the Enterprises and to submit a report to Congress each year.