Donald Trump is already making an impact as head of state.
Since his election, President Trump has attempted to fulfill many of his campaign promises, issuing dozens of executive orders during his first few weeks in office. One such order involved the reversal of previously planned mortgage insurance rate drops.
“In the past 30 days, the Obama administration had changed the Housing and Urban Development rule for monthly mortgage insurance premiums,” says Cynthia Mazza, a local loan officer for Cornerstone Home Lending. “The reduction was going to drop the monthly rate from 0.85% down to 0.55%. Trump revoked this rule on his first day as president.”
The plans set forth by former President Barack Obama were exclusive to home loans from the Federal Housing Administration, an independently funded and government-regulated mortgage insurer.
“FHA loans are typically geared towards first-time homebuyers and low-income families,” Mazza says. “The now-cancelled insurance premium reductions would have benefited this demographic greatly, in the form of lower monthly payments on their home.”
For point of reference, a homebuyer attempting to purchase property between $200,000 and $220,000 in the state of Utah would be paying roughly $50 less on their monthly mortgage at an insurance rate of 0.55%.
The implosion of the mortgage industry in 2008 gives context to the justification of a lower rate. Confident that the real estate market has greatly recovered since the Great Recession, the Obama administration wanted to change the premium in an attempt to help the lower and middle class.
Although President Trump himself has yet to comment on the executive order, he still likely has concerns about the housing industry. Maintaining current FHA mortgage rates may be seen as a precautionary measure to ensure solvency, since lowering the rate increases risk for HUD.
It’s possible that a rate cut will be implemented again in the future, but the Trump administration has confirmed that the current rate is, for now, indefinite.