For families hoping to buy their first home, this week brought some bad news: many will have to pay more for a mortgage.
Last week, the U.S. Department of Housing and Urban Development (HUD) announced it was cutting the mortgage insurance rate for Federal Housing Administration (FHA)-backed loans by 0.25 percentage points.
This week, the new administration issued an executive order that rolls back that cut.
The rate cut would have translated to a savings of about $500 for the first year of a $200,000 mortgage.
For decades, FHA home loans have made homeownership more affordable and more accessible. During the mortgage crisis, they also brought needed stability and security to a troubled marketplace.
CRL Senior Researcher Sarah Wolff
Senior researcher Sarah Wolff from the Center for Responsible Lending (CRL) said in a statement, “The Administration’s actions will make it more difficult for low-to-moderate income borrowers to transition from renters to homeowners, particularly in an environment where conventional mortgage loans have become harder for the average consumer to access.
"An FHA loan is often the most important, affordable tool a family can use to purchase their home especially if they’re first-time homebuyers."