The Federal Housing Administration is following through with its pledge to increase upfront and annual insurance premiums on its forward single-family business.
Unveiled late Monday, the increases are designed to strengthen FHA's capital position and "have minimal impact on the market and borrowers," according to FHA acting commissioner Carol Galante. She noted that FHA streamline refinances are exempt from these premium hikes.
Starting April 1, FHA will hike its upfront premium by 75 basis points to 175 bp on all single-family loans, including jumbos.
FHA is also hiking the annual premium on loan balances of up to $625,500 on April 1. On higher balance loans or jumbos, FHA is planning to implement a 35-bp hike in the annual premium on June 1.
The federal mortgage insurance agency currently charges a 115 bp annual premium when the loan-to-value ratio is above 95%.
These premiums are expected to slow FHA originations from $218 billion in the current 2012 fiscal year that ends September 30 to $150 billion in FY 2013.
