Market Update

Rates were stable in the past week. Freddie Mac announced that for the week ending March 10, 30-year fixed rates averaged 4.88%, up slightly from 4.87% the previous week. The average for 15-year fixed remained at 4.15%. Adjustables were also stable with the average for one-year adjustables decreasing slightly to 3.21% and five-year adjustables increasing one tick to 3.73%. A year ago 30-year fixed rates were at 4.95%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac, "Rates held steady amid a strong employment report. The private sector added 222,000 jobs in February, the most since March 2006 while the unemployment rate fell to 8.9 percent, the lowest share since April 2009. Rates for 30-year fixed-rate loans have averaged at or below 5 percent in every week but one this year, contributing to record home affordability. The National Association of Realtors® Housing Affordability Index rose to an all-time record high in January, based on figures dating back to 1971." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

FHA MIP Changes Effective April 18, 2011

The increase in Annual Mortgage Insurance Premiums for forward mortgage amortization terms is effective for case numbers assigned on or after April 18, 2011.
The new procedures for requesting case numbers are effective on April 18, 2011. Automatic case number cancellation is effective for all case numbers not insured prior to April 18, 2011.

Summary – Increase in the Annual Mortgage Insurance Premium

Given the legislative mandate in section 202 of the National Housing Act for ensuring that FHA’s Mutual Mortgage Insurance Fund (MMIF) remains financially sound, it is imperative that the MMIF is further strengthened to ensure that FHA will continue its historic role of providing a home financing vehicle during periods of economic volatility and its mission of helping underserved borrowers.

The charts below illustrate the 25 basis points (bps) increase in the Annual Mortgage Insurance Premiums. There are no changes to the Upfront Mortgage Insurance Premium (UFMIP). It is anticipated that this increase will have minimal impact on borrowers but will significantly strengthen the capital position of the MMIF.

The increase in the Annual Mortgage Insurance Premiums for forward mortgage amortization terms is effective for case numbers assigned on or after April 18, 2011.