An improved housing market has led the Federal Housing Administration (FHA) to reduce the annual mortgage insurance premiums new borrowers will pay by half of a percent.
The premium cut is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years, said the Department of Housing and Urban Development, parent agency of the FHA.
HUD said the reduction reflects the improved economic health of FHA’s Mutual Mortgage Insurance Fund (MMIF). FHA’s recent annual report to Congress demonstrates the economic condition of the agency’s single-family insurance fund continues to improve, adding $21 billion in value over the past two years.
“Since 2009, the Obama Administration has taken bold steps to reduce risks in the mortgage market and to protect consumers,” HUD Secretary Julián Castro said. “ These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”
FHA increased its premium prices to stabilize the MMI Fund in the wake of the nation’s housing crisis,
FHA’s new annual premium prices will take effect for all new FHA-insured mortgages endorsed toward the end of January. FHA will publish a mortgagee letter detailing its new pricing structure shortly.
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