Americans had better enjoy the extra $40 they'll continue to get in their biweekly paychecks for the next two months, because most of them will be paying for it many times over in the form of higher mortgage costs.
Lost in the contentious debate over the payroll tax cut extension - a 2% cut in U.S. workers' Social Security tax - was the devious way Congress devised to pay for it.
The law that Congress passed - and U.S. President Barack Obama signed - included a provision that will increase a guarantee fee that finance companies Fannie Mae and Freddie Mac charge to mortgage loan originators - a fee that will get passed on to borrowers as a slightly higher interest rate.
"We understand the desire by Congress to extend the payroll tax [cut] because so many Americans are hurting right now," David Stevens, president of the Mortgage Bankers Association, told the Los Angeles Times. "But the cost of that is going to be directly paid for by a whole other set of Americans who use Fannie Mae and Freddie Mac for their mortgages."
The 0.1% increase doesn't sound like much - it would add $11 a month to the payment on a $200,000 loan and $18 a month to a $300,000 loan. But it adds up over the life of a 30-year mortgage.
A $200,000 loan would end up costing $3,863 more, while a $300,000 loan would cost $6,246 more. That's quite a premium to pay for an average payroll tax cut benefit of less than $200, and most people will never even know they're paying it.
The hidden tax, which goes into effect April 12, will affect most people buying or refinancing a home, as Fannie Mae and Freddie Mac account for about 60% of the U.S. mortgage market.