The White House announced Wednesday that the Federal Housing Administration will reduce mortgage insurance premiums by half a percentage point down to 0.85 percent in an effort to boost U.S. homeownership. FHA raised premiums in response to its declining mortgage insurance fund, which forced the agency to take a $1.7 billion bailout in 2013. Since then, it has rebuilt its capital, spurring some commentators to call for a cut. In a statement, the White House estimated that the cut will save both first-time buyers and existing homeowners about $900 in annual mortgage payments.
HUD Secretary Julián Castro said the change will make homeownership more affordable for millions of Americans in the next three years. The announcement is welcome news to many of housing's biggest trade organizations, who have been vocal in the past few months about the consequences of higher premiums. Housing analysts have also joined the rising chorus of those urging for lower premiums. Still, the move is bound to attract some measure of criticism, particularly among Republicans and analysts who say FHA is setting itself up for another disaster.
The U.S. job market finished the year on a strong note as total nonfarm private sector employment increased by 241,000 during December, according to the ADP National Employment Report for December 2014. By comparison, only 227,000 jobs were added in November. December was the fourth consecutive month and the eighth month out of the last nine in which more than 200,000 jobs were added nationwide. The highest total of jobs added during any one month in 2014 was 297,000 in June.