Julián Castro, U.S. Housing and Urban Development Secretary announced that the Federal Housing Administration will reduce annual premiums where majority borrowers will pay a quarter of a percent. Annual mortgage insurance premium by the FHA will be reduced by 25 basis points for majority new mortgages with a closing date after January 26th. These new rates are estimated to save new FHA-insured real estate owners an average of $500 for 2017, Castro claimed. Castro stated that consumers are faced with higher credit costs as mortgage interest rates rise.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Castro stated. “This is fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers.”
The FHA is going on its fourth year of improved economic health, the administration reported. FHA’s value has increased by $44 billion from 2012 to today.
“We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers. Homeownership is the way most middle class Americans build wealth and achieve financial security for themselves and their families,” principal deputy assistant secretary for HUD’s Office of Housing, Ed Golding, said in the report.