The Federal Housing Administration announced Monday that it was reversing course and planning to cut its annual mortgage insurance premiums, less than two months after saying there were no plans for further cuts.
“Most new mortgages” with a closing or disbursement date on or after Jan. 27, 2017 will see a 25 basis point cut to the annual mortgage premiums, according to the FHA.
HousingWire staffer Ben Lane reports that reactions from people in the housing industry varied from welcoming the cuts to wondering why it took the FHA so long to make the move.
David Stevens, the president and CEO of the Mortgage Bankers Association and a former FHA commissioner, said that consumers will benefit from the changes, but said that lenders need to see more changes to the FHA’s policies.
“Reducing the cost of FHA loans benefits borrowers, but other changes to reduce uncertainty for lenders would be required to truly invigorate the FHA program,” Stevens continued. “MBA looks forward to continuing to work with all stakeholders, including the new administration, to ensure the safety and soundness of the FHA program.”
The National Association of Realtors said the changes will help more first-time buyers enter the housing market. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers,” said [NAR President William] Brown. “Now, we have a real opportunity to get back on track.”