January 16, 2015 | by Katie Claflin
Categories: Affordable Housing, First Time Buyer, Homeownership
Earlier this week HUD Secretary Julian Castro declared 2015 to be a ‘year of housing opportunity.’ The steady increase in housing prices (up 32 months in a row) and relatively low unemployment statistics, he explained, have left many Americans feeling more confident in the housing market and optimistic about what the future holds.
Secretary Castro also announced that, in an effort to take advantage of the current economic momentum, the Federal Housing Administration (FHA) is making significant changes to expand access to FHA-insured loans.
First, as President Obama announced last week, FHA is reducing its annual mortgage insurance premiums by 50 basis points, from 1.35% of the loan amount to 0.85% of the loan amount. It is estimated that this reduction will save FHA borrowers an average of $900 annually over the next three years.
And second, FHA has undergone a year-long effort to clarify its lending policies, which is helping lenders feel more confident with FHA requirements, thus expanding credit access to a wider range of borrowers.
Read Secretary Castro’s entire speech here.
And FHA is not the only federal agency making changes to expand access to homeownership. In December 2014, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, announced its plans to offer new mortgages that require a down payment of as little as 3 percent.
While the housing market has strenghtened over the past few years, a recent Money Magazine article finds that many first-time home buyers have been left out of the loop. Citing data collected by the National Association of Realtors, the article reports that first-time home buyers currently account for only a third of the mortgage market, down from the historic norm of 40%.
Together these federal changes aim to bring first-time buyers, who are typically younger with lower incomes, out of the shadows and back into the home-buying market.
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