What's new?
FHA's decided that it's time to hike up mortgage insurance rates, again...
The FHA commissioner has stated that this is a required measure to "protect FHA's single-family insurance programs". In other words, there are capital concerns, and this appears to be an easy solution.
Over the past 5-10 yrs FHA's market share has significantly increased due to lack of private financing, however, we're starting to see a trend in the opposite direction. Conventional financing is making a comeback, and we're hearing hints of coming private label products.
Good or bad for local market?
The Denver Metro demographic is very highly educated, which generally results in higher credit scores, etc. With that said I do not anticipate FHA changes to have as high of a relative effect, however, we all work on a deal to deal basis, and will most likely feel some sort of repercussion.
At minimum I think lower credit score buyers may stay on the fence a little longer, resulting in a smaller buyer pool.
FHA's sweet spot: 640 - 680 credit scores
-Mortgage insurance costs are high, however rates are great regardless of credit score and down payment.
Conventional sweet spot: 680+ credit scores
-Multiple mortgage insurance options. Rates are good to great depending on credit score and down payment.
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