To refinance your mortgage, it will cost you an extra .5% starting September 1, 2020.

It does not matter whether you are doing a cash-out or no cash out refinance. Refinance mortgage loans sold to Fannie Mae and Freddie Mac after Sept. 1, 2020 will include a new adverse-market refinance fee of 0.5%. The two government sponsored enterprises announced this fee on Wednesday night, 9/12/2020.

“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” the letter from the larger of the two government-sponsored enterprises said.

“As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee,” it said.

There continues to be large volumes of refinance activity, with refinance applications up more that 65% – posting 12 straight weeks of year-over-year growth.

The fee’s effects will be felt immediately.

For example, for a loan of $291,300 – the median home price in the second quarter – that .5% will cost lenders $1,456. The 9/1/2020 sell date means some of the refinance impacted are already locked and can’t be adjusted at this point, so lenders will have to pay the fee. If the deal isn’t locked, the cost likely will be passed on to the consumer.

The new credit fee doesn’t apply to purchase mortgage loans.