April 2017   Volume 43, Number 4      


Trump Cut Causes FHA Applications to Decline by 3.2 Percent

Applications for government-insured loans declined in January, resulting in an overall drop in mortgage volume. Total mortgage applications declined 3.2 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association. Volume was down by 18 percent for the last week of January as compared to the same week one year ago.

FHA applications dropped by 13 percent as a direct result of the Trump administration decision to reverse a cut to the FHA’s annual mortgage insurance premium just hours after the presidential inauguration ceremony. That cut would have decreased monthly payments for thousands of new, lower-income borrowers.

“Following the decision to suspend a proposed decrease in the FHA mortgage insurance premium, FHA refinance applications dropped more than 25 percent, while FHA purchase applications fell almost 6 percent,” said Michael Fratantoni, chief economist for the MBA.

After declining slightly at the beginning of 2016, mortgage rates increased following the presidential election and now continue on an upward trajectory. The average contract interest rate for 30-year fixed-rate mortgages for conforming loan balances ($424,000 or less) increased to 4.39 percent, with points increasing to 0.34 for 80 percent loan-to-value ratio loans.

Although mortgage applications declined, home price gains continue to increase. As housing affordability weakens across the country, demand for housing is also rising. Fratantoni predicts that home sales will grow in 2017, despite the lack of inventory.

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In this issue:

Top U.S. Markets for Buying and Selling Real Estate

Big Institutions Sell off Commercial Real Estate

Fed Chair Says Rising Real Estate Prices Put Small Banks at Risk

Iowa Realtor Warns Agents about Email Scam

Mortgage Delinquencies Spike among Some Homeowners

Next-Generational Homes Are the Latest Real Estate Trend

Silicon Valley Is the Top U.S. Real Estate Market

Top Three Legal Issues Facing Brokers

Trump Cut Causes FHA Applications to Decline by 3.2 Percent

Real Estate Agents: Stop Commoditizing Your Services


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