Homebuyers will be paying higher fees on mortgages backed by the Federal Housing Administration (FHA) after the agency announced this week that it is hiking fees in an effort to bolster its reserves and encourage the return of private capital to the housing market.
From REALTOR® Magazine:
Starting April 1, FHA will increase its annual mortgage insurance premium for loans under $625,500, from 1.15 percent of the loan amount to 1.25 percent. Starting June 1, larger loan premiums will increase 0.35 percent of a percentage point, bringing the total premium costs up to 1.5 percent of the loan amount, The New York Times reports. FHA also will raise a fee for the upfront mortgage premium by 0.75 of a percentage point, which will now total 1.75 percent of the loan amount.
The National Association of REALTORS® (NAR) issued the following response to the announcement:
“While NAR is opposed to increasing any barriers to homeownership, the increase in Mutual Mortgage Insurance Fund (MMIF) premiums is an unfortunate byproduct of our continuing housing crisis. FHA is, and has been, a critical tool in restoring the health of the housing market and ensuring its safety and soundness is essential. However, once the MMIF is stabilized, FHA should reduce premiums commensurate with risk.”