Higher rates for FHA mortgage insurance

The Wall Street Journal reported today that the FHA is raising monthly insurance premiums on loans with less than 20% down. The rates will almost doulble from 0.55% per year (on the loan amount) to 0.9%. For an average home this will translate into about $500 per year. At the same time the upfront insurance premium will drop from 2.25% to 1% of the loan amount.

Also the maximum amount that a seller can contribute to the sale is dropping from 6% to 3%.

What will the Fed do?

Today, the Wall Street Journal reported that the Fed is rumored to be considering a second round of mortgage buybacks, whereby they would buy billions of mortgages in the secondary market. The last program, which ended in March 2010, had the effect of reducing mortgage rates for consumers to near record lows. When it ended, everyone expected rates to increase, but due to unforseen, unfolding economic factors, rates continued to decline to their current lows, which have not been seen in over 50 years.

Stay tuned to see what rates will do........