Fannie Mae and Freddie Mac have hiked the standard modification benchmark interest rate.

The new rate, which will become effective Jan. 13, is 4.25%, representing an increase of 37.5 basis points from the previous benchmark rate set in December. This is the first time that this rate has been moved above 4% since February 2016 and the highest it has been since September 2015.

The benchmark rate is provided by the government-sponsored enterprises and is used in determining the terms of trial period plans for standard modifications, streamlined modifications, capitalizations and extension modifications for disaster relief. The rates used in trial period plans are required to be used for final modifications.

The benchmark rate for modifications is adjusted periodically based on the GSEs' evaluation of prevailing market rates.

In December, Fannie and Freddie detailed a new loss mitigation option called the Flex Modification to replace the Home Affordable Mortgage Program.