The Federal Housing Administration’s rate increases in mortgage insurance have caused buyers to walk away and transactions to fall through, according to the National Association of REALTORS®’ second Survey of Mortgage Originators, which includes questions to lenders about the impact of changes to the FHA program. In recent years, FHA has increased its premium structure as a way to make up for the 2 percent capital reserve ratio it’s required to keep but lost when many loans went sour during the housing crisis.
The rise in FHA fees is also pricing some buyers out of the market. Lenders surveyed by NAR report that 5.7 percent of originations were lost because of the increase in FHA fees. That would correlate to about 200,000 to 250,000 home sales lost, according to NAR estimates.
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