Charges raised

August 23, 2008 | By Raymond Tan In Property |

From 1 Oct 2008, Fannie Mae will raise the fee that it charges lenders to buy their mortgages or guarantees home-loan securities to 0.5% percentage point.

The move, seen by analysts as an attempt by the mortgage giant to boost its revenue, will only make borrowings more expensive, and thus, housing prices will slump even further.

Fannie Mae said that the change is necessary to align pricing with credit risks and to mitigate losses. With its new rate, a lender selling a US$300,000 mortgage to the company will forfeit US$1,500, up from US$750.

And that’s not all. It, along with other mortgage banks such as Freddie Mac, will tighten qualification standards for its loans, which will also lead to more expensive borrowings.

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