With Seattle Home Prices Exploding, Cantwell Questions Trump Administration Decision to Cancel Scheduled FHA Insurance Rate Cut, Costing Washington Homebuyers $500 Each Year
Senator: Trump decision leaves Washington homebuyers squeezed between housing price rock and costly mortgage hard place
Nearly 40% of millennial homebuyers use FHA-insured mortgages to buy homes
WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) questioned newly-confirmed Secretary of Housing and Urban Development (HUD) Ben Carson on why the Trump Administration would make buying a home more expensive – especially at a time when first-time homebuying is at an all-time low.
In her letter to Carson, Cantwell inquired about the cancellation of a scheduled insurance premium rate cut for Federal Housing Authority (FHA)-insured mortgages. To encourage first-time homeownership, especially in high-priced markets like Seattle, President Obama ordered a reduction in the federal mortgage insurance rate in the final week of his presidency. The scheduled rate cut was projected to save homebuyers an average of $500/year – equaling thousands of dollars in savings over the life of a mortgage. Yet minutes after his inauguration, President Trump suspended the move.
“[First-time homebuyers] are exactly the middle and working class Americans that President Trump promised to fight for in his campaign. This decision will… prevent thousands of families from purchasing a home, blocking one of the first steps on the road toward attaining the American Dream,” wrote the Senator.
Across Washington state, the barriers to first-time home ownership are rising at a staggering rate. Washington state home prices have risen 46 percent since 2012. With wages stagnating and credit expected to tighten, first-time homebuyers need access to affordable financing and credit like never before.
FHA-insured mortgages are crucial for many first-time homebuyers, particularly so for those in low-income and minority groups and about 40% of millennial homebuyers use FHA-insured mortgages to buy homes. Insured mortgages allow lenders to accept lower down-payments and adopt less stringent requirements for borrowers, making the mortgages easier to get for first time buyers. The FHA helped 30,000 Washingtonians buy a home in 2016.
The Seattle Times reports that since 2015, single-family prices in King County have been rising at their fastest rate in history. In the past several years, median home prices in Clark County and Eastern Washington have risen 60% and 20% respectively. Compounding matters, the Federal Reserve announced today that it has decided to raise interest rates, further limiting access to credit for homebuyers.
It is unclear where Secretary Carson stands on the issue of FHA insurance premium rate cuts. During his confirmation hearings, he pledged to review the rate cut once confirmed. Since his confirmation, he has issued no update on his position or the status of a review.
The full text of the letter can be found here.
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