The FHA announced this week they are cutting mortgage insurance premiums for borrowers, a move designed to counter the effects of rising interest rates. The annual fees that the FHA charges to guarantee the mortgages it backs are being lowered by a quarter of a percentage point which, equates to an annual cost of 0.60 percent of the loan. The new fee cut will save FHA-insured homeowners around $500 annually and is set to take effect January 27th.
Interest rates for a conventional loan are still hovering around 4% which, is still relatively low. What may be holding the market back is stagnate wage growth coupled with rising interest rates. As the rates increase, the cost of living increases which, puts a strain on prospective homebuyers and often out of contention. That said, if you can’t qualify for a conventional loan you can always pursue an FHA loan which, now looks like an extremely viable alternative.
If you have any questions regarding rates, mortgages or the housing market in general, please feel free to reach out to our team at your convenience. We are happy to assist you with all of your real estate related needs.