President Barack Obama said in a speech Thursday that mortgages need to be more accessible and affordable to creditworthy families to spur a stronger housing market. He said lowering Federal Housing Administration mortgage insurance premiums is one way to achieve that, potentially paving the way for hundreds of thousands of new home buyers to enter the real estate market.
“I want to talk about helping more families afford their piece of the American dream, and that is owning their own home,” Obama said in a speech during a visit to Phoenix on Thursday as part of a weeklong tour across country focused on the economic recovery. “Buying a home’s always been about more than owning a roof and four walls. It’s about investing in savings and building a family and planting roots in a community.”
Obama announced that FHA mortgage insurance premiums will be lowered by half a percentage point, moving from 1.35 percent currently to 0.85 percent. The lower costs are expected to save borrowers an average of $900 annually.
The FHA is a major funder of mortgages for first-time home buyers, as well as lower- and middle-income Americans, due to its low downpayment requirements of 3.5 percent of the purchase price.
The National Association of REALTORS® estimates that a reduction in FHA premiums has the potential to bring in 90,000 to 140,000 additional annual home purchases.