HUD reversal softens loan demand
This last week’s plunge in mortgage applications was at least partially triggered by a large drop in government-insured loans. Overall applications for FHA loans dove 13 percent last week, after the Trump administration’s first housing policy move. The Department of Housing and Urban Development suspended the reduction in Federal Housing Administration mortgage insurance premiums set to take effect Jan. 27.
The quarter-percentage point reduction in premiums would have decreased monthly payments for thousands of new, low-income borrowers. The plan to reduce premiums was first announced on Jan. 9, just days before the Obama administration left office. FHA applications spiked immediately upon the announcement.
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