On Jan. 7, President Barack Obama announced a plan to lower fees associated with home loans distributed by the Federal Housing Association. The reaction from the National Association of Home Builders, one of the largest trade associations in the nation, was overwhelmingly positive. The National Association of Realtors, another trade association, also announced support for the decision.
NAHB applauded Obama's plan. New-home construction may increase if demand rises due to lower fees. The Wall Street Journal reported economists' enthusiasm for the loosening qualifications required to apply for a U.S. home mortgage. With more accessible home loans, a greater volume of qualified borrowers are encouraged to enter the housing market. The NAHB valued the improved affordability and released a statement regarding its appreciation for the plan.
"NAHB commends the president for taking action to reduce FHA's annual mortgage insurance premiums by 50 basis points to 0.85%," said Kevin Kelly, the NAHB Chairman. Kelly also stated lower premiums may encourage and assist first-time home buyers enter the housing market. He also believed this was an indication of FHA's financial improvement.
The association is confident in the president's decision. In addition, CNBC reported home? builder stocks were on the rise. Lennar, Toll Brothers, PulteGroup, KB Home and DR Horton saw gains after President Obama's announcement.
Members of the NAR agreed with the intended plan. The real estate association's opinion on Obama's announcement was also positive, according to its press release.
"As the leading advocate for homeowners, Realtors strongly support Obama's plan to reduce annual mortgage insurance premiums on home loans backed by the Federal Housing Administration, which are currently so expensive that in 2014, roughly 234,000 credit worthy borrowers were priced out of the market," said Chris Polychron, president of the NAR.
He continued to state affordable loans offered by the FHA would encourage first-time homebuyers that have been discouraged by higher fees. Over the past four years, the percentage of first-time buyers applying for FHA loans has decreased 17%.
Polychron stated that NAR predicts the execution of this plan could result in 90,000 to 140,000 additional home purchases each year. The real estate association forecast a great deal of growth in the housing market as a result of the president's announcement.
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