Image: House with bills © Creatas, Photolibrary

Related topics: homes, home buying, home financing, mortgage, refinance

Mortgage interest rates have moved up, down and sideways in recent months. Yet apart from that volatility, some key trends could make mortgages more expensive regardless of their eventual rates.

Here's a look at five trends and how they could raise borrowers' loan costs.

Feds restrict loan officers' pay

A new federal regulation that restricts how loan officers are compensated might result in higher costs for borrowers.

So far, no one knows exactly how the rule, which went into effect April 1, will play out, but one result could be fewer choices of interest rate and fee combinations, says Reggie Green, a loan officer at Firstline Mortgage/Crossline Capital in Chandler, Ariz.

"You're going to see two options," Green says. "Pay all the loan officer's compensation upfront or take a higher rate and the loan officer gets totally paid through the rate."

The rule "is already sounding like it's a shell game," says Gary Parkes, a loan officer at Acopia Home Loans in Woodstock, Ga.

Parkes says the rule could be especially problematic for smaller loan amounts because the loan officer won't earn enough to justify the time involved.

"The numbers are just not going to really work," he says.

Loan officers are virtually unanimous in their opposition to the rule, so much so that two trade organizations sued the Federal Reserve to try to stop it from taking effect.

Fannie, Freddie raise risk-based prices

Borrowers who have a middling credit score, a small down payment relative to the property's purchase price or little equity relative to their home's value will be subject to higher interest rates on so-called conforming loans that lenders can sell to Fannie Mae or Freddie Mac.

The higher interest rates occur because the two government-controlled entities adjusted their risk-basing pricing structures, effective since March 1 for Freddie Mac and April 1 for Fannie Mae.

Borrowers can avoid the higher rates by paying points upfront, says Jim Sahnger, a mortgage consultant at FBC Mortgage in Jupiter, Fla. One point is equal to 1% of the loan amount.

"Depending on the equity in the house and their credit scenario, they're going to pay a minimum of another quarter-point upfront to get the lowest rate or their rate is going to be higher," he says.

Risk-based pricing is a good concept, but the adjustments "send the wrong message," says Fred Arnold, a loan originator and branch manager at American Pacific Mortgage in Santa Clarita, Calif.

"It's going to prevent a lot of people from refinancing or being able to qualify for a purchase," he says.

FHA raises premiums

Borrowers who opt for a loan insured by the Federal Housing Administration will face higher costs.

Effective April 18, the FHA plans to raise its annual mortgage insurance premium by one-quarter of a percentage point on all 15-year and 30-year loans.