FHA Mortgage Rates Update Plus FHA Guidelines Could Soon Change
By: Josh Manier
In recent news, FHA has decided to raise mortgage insurance premiums from 1.75% to 2.25% which was announced today. This was done in a move to offset rising mortgage delinquencies which are creating mounting losses for the government agency. In addition to FHA loans being higher risk mortgages for new buyers, it has been reported that banks also over the past couple of years refinanced riskier loans from their portfolio to the FHA program.
According to data from the Federal Housing Administration, over 90% of loans originated in the first two quarters of 2009 were FHA loans. This figure is remarkable when compared to a few years ago, where FHA mortgages accounted for approximately 2% of the total loans originated in the country. Such a dramatic it constriction of credit qualifying for new loans and the overall credit crisis has lead to buyers flocking to the safe haven of FHA loans for easier qualifying.
Talks of possibly increasing credit score requirements and/or raising down payment requirements have also been discussed in light of the increased loan defaults, however nothing has been finalized as of yet. We can conclude however, that even the government back programs are feeling the economic pressure of the credit crisis. If FHA were to raise the minimum required down payment, it would be pulling the plug on one of the last remaining low money down programs in the country. As of recently, rates for FHA loans have remained in the upper four percent range.