Realtors in Wisconsin worry that a planned increase in the cost of federal mortgage insurance could stifle the already struggling home market in the state. The insurance is typically used by low-income buyers, who could be forced out of the home market by the cost increase, they say.

This summer, Congress gave the Federal Housing Administration, which provides the insurance, authority to increase its premiums by up to three fold. The agency planned to double the premiums this month but instead postponed the increase until October. The average increase in monthly premiums will be $40, according to FHA.

Lenders typically require borrowers making less than a 20 percent down payment on a home to take out mortgage insurance, which offers partial protection to lenders if the borrower defaults. The insurance lowers closing costs and credit requirements for the borrower, lessening barriers for low-income buyers, but then the borrower is on the hook for monthly payments, according to the U.S. Department of Housing and Urban Development.

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Posted in: Housing Market
Tags: borrower defaults, department of housing and urban development, federal housing administration, fha mortgage insurance, mortgage insurance program, prospective buyers, rate increase, wisconsin realtors association

Today’s weekly mortgage applications survey from the Mortgage Bankers Association seemed to offer a small glimmer of hope.

Yes, refinancings—which have been running at around 80 percent of all mortgage applications—fell despite a new record low average rate on the 30-year fixed of 4.38 percent.

Not so good.

But on the other hand, purchase applications rose 2.4 percent, largely driven by a 4.5 percent increase in government purchase applications (FHA).

Great, except for that last part.

Government purchase applications have been driving the market for the past year, accounting for, at times, nearly half of all new loans. That may be about to change. New premium authority (translation: higher prices) goes into effect next week, on October 4. New seller concessions policies are about to go into effect as well.

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Posted in: Mortgages
Tags: jumbo loan, mortgage applications, mortgage bankers association, mortgage market, mortgage origination, national mortgage news, new mortgage, purchase loans