The suspension of the FHA mortgage insurance cut is not such a bad thing.
Trump got voted into office and not even a hour later we get reports that HUD (housing Urban Development) Secretary Dr. Ben Carson has suspended mortgage insurance cut indefinitely. The cut what set in place by Obama that would take affect January 29th.
We assume it is a bad thing because it is said to save a homeowner roughly $500 a year for those whom use a FHA loan. This is where homeowners are offset. How am I suppose to be happy about this? That might be one of many thoughts that crossed your mind. But, before jumping off the Trump bandwagon lets think back to some dark restless nights of mortgage rates in 2008.
In 2008 the stock market crashed and Im sure you remember that. You might also remember that mortgage rates were so high that home prices crashed as well. There is no doubt it was in correlation with the banks running out of money.
After the bailout house prices blew up! It was great for the few that were able to withstand those high payments. But for many it was too rough on the families and many foreclosures happened in that short period of time. Now we want to keep this simple and not dig too deep into the crash, I just bring it up to jog your memory.
In 2013 the FHA almost ran out of money! They required a $1.7 billion dollar bailout! Could you imagine what would happen if the government agency that was created to help lower income home buyers was to run out of money? You guessed it that would lead to increased interest rates which leads to the decrease in property values.
At the current state the market is still extremely competitive. As long as people still have the FHA option my intuition tells me that we wont have a huge surge in interest rates. And with the cut to the mortgage insurance premiums out of sight. We should be able to keep funds in the administration.