Tags: Trump Administration | Trump | Mortgage applications | Home Loan Demand | rates

Home-Loan Demand Drops 3.2 Percent After Trump Cuts Mortgage Break

Home-Loan Demand Drops 3.2 Percent After Trump Cuts Mortgage Break

(Getty)

By    |   Wednesday, 01 February 2017 01:35 PM

Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA).

A plunge in applications for government-insured loans was behind a drop in overall mortgage volume, CNBC.com reported.

The FHA share of total applications decreased to 12.1 percent from 13.6 percent the week prior. The VA share of total applications increased to 12.4 percent from 12.2 percent the week prior.

This drop was seen as “a direct result of the Trump administration reversing a cut in the FHA's annual mortgage insurance premium” just hours after the inauguration, CNBC.com explained.

“That cut was the last major policy act of the Obama administration and would have decreased monthly payments for thousands of new, lower-income borrowers. FHA applications increased immediately after the cut was announced, and lenders have reported that many of those have also been withdrawn,” CNBC.com reported.

The Trump administration's nominee for secretary of Housing and Urban Development, Ben Carson, said he wanted to examine the cut further, along with the fiscal health of the FHA's insurance fund, and make sure a cut in premiums wouldn't increase taxpayer risk, CNBC.com reported.

"Following the decision to suspend a proposed decrease in the FHA mortgage insurance premium, FHA refinance applications dropped more than 25 percent, while FHA purchase applications fell almost 6 percent," Michael Fratantoni, chief economist for the MBA, told CNBC.

Meanwhile, the refinance share of mortgage activity decreased to 49.4 percent of total applications from 50.0 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to its highest level since December 2016, 4.39 percent, from 4.35 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.61 percent from 3.57 percent.

The news comes just days after the Trump administration, hours after taking office, suspended a plan to cut mortgage insurance premiums on federally insured home loans that the U.S. government had estimated would save eligible homeowners an average of $500 a year.

The move immediately drew fire from Democrats, and it offered an early example of the potential conflicts ahead as Republican President Donald Trump rolls back measures put in place by his Democratic predecessor, Barack Obama.

"In one of his first acts as president, President Trump made it harder for Americans to afford a mortgage," U.S. Senate Minority Leader Chuck Schumer said in a statement.

"Actions speak louder than words," Schumer said. "One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages."

Schumer said the cut equaled an average of $500 per year.

(Newsmax wire services contributed to this report).

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
Personal-Finance
Mortgage applications decreased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA).
Trump, Mortgage applications, Home Loan Demand, rates
454
2017-35-01
Wednesday, 01 February 2017 01:35 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved