In a move that will help first-time home buyers, President Obama announced today that the Federal Housing Administration (FHA) will reduce its annual mortgage insurance premiums by 0.5 percentage points from 1.35% to 0.85% during an address in Phoenix.
A fact sheet released by the White House says this reduction in premiums will produce an average savings of $900 annually for all new FHA borrowers and that the lowered premiums will create opportunities for 250,000 new home owners to purchase a home over the next three years.
“In recent years, many aspiring home owners have been waiting on the sidelines before buying a new home,” the fact sheet states. “By making mortgages more affordable and helping create further confidence among those wanting to buy a home, the FHA premium reduction will help hundreds of thousands of additional families own a home for the first time.”
NAHB supports this action and has previously called on FHA to lower its insurance fees to further boost the housing recovery and reduce the cost of creditworthy borrowers. NAHB Chairman Kevin Kelly, who attended the Phoenix event, issued the following statement after Obama spoke:
“NAHB commends the President for taking action to reduce FHA’s annual mortgage insurance premiums by 50 basis points to 0.85%. Lower premiums will make home loans more affordable for qualified borrowers, particularly first-time buyers, and help to alleviate tight credit conditions in the mortgage market. This prudent course reflects a recent actuarial report that FHA is back in black and strengthening its financial health. The new premium structure will allow FHA to continue building its reserves.”
The Hill also cited Kelly’s comments in a report on the administration’s plans to lower federal mortgage fees.