Things Are Looking Better for Mortgages
There’s lots of good news about mortgages, rates, and fees this week. Here’s our rundown.
No More FHA Premium Increases
After two years of premium increases, the forward Federal Housing Administration single-family program is cash flowing again. Shaun Donovan, United States Secretary of Housing and Urban Development, promised no more increases. This was on the heels of the FHA announcing that they required a $943M bailout despite a fee increase. In 79 years, the FHA has never requested any funding. They are supposed to be self-funded by the premiums charged to the homeowners.
FHA’s share of the mortgage market has gone from 3.1% of loan originations in 2005 up to its peak of 21.1% in 2010. Currently, it was 16.5% as of the 4th quarter of 2012.
Donovan explained that the number of FHA single-family loan endorsements has declined to levels comparable to those seen in fiscal years 2002 and 2003. And because he’s committed to helping get more people in homes, he will not be increasing the premiums any further than what they were raised starting April 1, 2013. That increase added approximately $13 per month to the mortgage payment.
Donovan is concerned that the window of opportunity for housing finance reform is closing.
While it is widely agreed that the U.S. housing finance system is broken, with taxpayers subsidizing nearly all new loans, mortgage giants Fannie Mae and Freddie Mac – both under conservatorship – are generating billions of dollars in income and there is some concern that the revenue stream could be too tempting for a federal government looking to trim its deficits.
Some members of Congress have taken steps to try and prevent the two firms from becoming “piggy banks” for the administration and Secretary of Housing and Urban Development Shaun Donovan late Wednesday said he hopes lawmakers will come up with a solution sooner rather than later.
“I believe we have a window right now where we can have a grownup conversation about the GSEs and FHA but I believe we will lose that window if we let it linger to long,” Donovan said in a speech at the Mortgage Bankers Association annual policy conference.
The 2014 budget proposal released by the Obama administration projected that the FHA would need to draw more than $900 million from U.S. taxpayers to help finance its lending business, but Donovan said the losses are from legacy loans and a reverse mortgage program that has gone awry.
All Freddie Mac Survey Rates Drop
Mortgage rates are dropping and two set records for the lowest rates ever.
The average weekly rate for a 30-year fixed-rate mortgage fell from 3.57% to 3.54%.
A year ago, the weekly average for 30-year loans was 3.88%, the weekly average for 15-year loans was 3.12%, the weekly average for five-year Treasury hybrids was 2.85% and the weekly average for one-year Treasury ARMs was 2.74%.
And the average weekly rate for a 15 year fixed rate mortgage fell from 2.63% down to 2.61%.
And a Bankrate.com survey of mortgage professionals, four out of five said they believed rates would drop or hold steady in the coming week.
If you are thinking of a new home or refinancing, talk to a reputable mortgage loan officer. They diligently research market trends and programs to help find the that best one for your situation.