Federal Housing Administration Fee Cuts Expected to Boost Home Sales

What type of impact will the Federal Housing Administration’s move to lower insurance premiums really have on the housing market? Housing experts are making predictions that the lower fees could translate into thousands of new home sales this year and next.

The Federal Housing Administration recently reduced its annual mortgage insurance premiums from 1.35 percent to 0.85 percent. According to estimates by the National Association of REALTORS®, the lower rates could result in big savings over time for borrowers. For example, a borrower with a $200,000 mortgage could unlock a savings of nearly $1,000 over the first year. By year five, the borrower may have saved nearly $4,800, and over 30 years potentially about an $18,000 savings.

The FHA’s lower pricing will likely draw thousands of credit-worthy borrowers back into the market, NAR notes. NAR Research has estimated that the fee reduction will price an additional 1.6 million to 2.1 million renters, along with many trade-up buyers. This could result in 90,000 to 140,000 additional annual home purchases, NAR estimates.

th

%d bloggers like this: