The Obama Administration is directing, via executive action, the Federal Housing Administration to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.
“Today, the President announced a major new step that his Administration is taking to make mortgages more affordable and accessible for creditworthy families,” according to a statement from the White House.
The White House statement says that the typical first-time homebuyer, this reduction will translate into a $900 reduction in their annual mortgage payment.
“Existing homeowners who refinance into an FHA mortgage will see similar reductions to their mortgage payments as well,” the statement reads. “In total, this action will help millions of families save billions of dollars in mortgage payments in the coming years, helping to support the housing market recovery.”
While the White House says that the new premium level is fully consistent with the FHA’s commitment to continue strengthening its financial health through growing reserves, the Republicans in Congress have reservations that the Congressionally-mandated reserves are well funded.