As previously reported, the Federal Housing Administration reduced the annual insurance premium required from 1.35 percent down to .85 percent.
Not only will this reduction in fees save borrowers thousands of dollars, but it’s also projected to boost home sales.
The National Association of Realtors (NAR) is estimates the boost in home sales to result in 90,000 to 140,000 additional home purchases per year!
Moody Analytics doesn’t think the boost is going to happen over night, but they agree the reduction in FHA premium’s will be directly linked to a boost in home sales. Moody’s estimates 2015 with approximately 45,000 additional existing and new home sales. Add in another 20,000 homes sales to first time home buyers for single family housing starts. The largest impact of the reduction will be seen further into 2016. More than doubling 2015 housing sales, Moody’s estimates existing and new home sales to increase by 100,000 and an additional 40,000 for the single family starts.
One thing we can all agree on, is the reduction in mortgage insurance premiums is a benefit to the real estate industry by making housing more affordable and the idea of being a homeowner more attractive.
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