According to this story,
The Department of Housing and Urban Development said Friday that the reduction to the annual mortgage insurance premiums borrowers pay when taking out government-backed home loans has been “suspended indefinitely.”
…Borrowers with larger home loans would have seen an even bigger drop in their premium rate.
The premium cut was an abominable last-minute policy of the outgoing Administration. Fortunately, the Trump Administration canceled it before it could take effect. [Update: Today’s WaPo editorial agrees with me.]
The worst aspect of the policy would have been the special rate cut for large mortgages. Offering particularly cheap loans for large amounts is nothing but a gift to young professionals pushing their way into cities where housing supply is fixed.
If you want to make housing more affordable in San Francisco or Brooklyn, you have to address supply. Subsidizing demand without increasing supply simply serves to drive up prices and squeeze out the lower middle class.
Key question though (and very hard to answer): are mortgage insurance premiums above or below actuarily fair rates? I’ve always wondered this about Canada’s CMHC, which has just raised its premiums (under current Liberal government, though it’s not an especially partisan issue).
Subsidizing mortgages but charging for insurance seems crazy.
Actually not. Private jumbos are less expensive than government insurance. Not that this is a big deal. It just means they will be held privately a few years until appreciation lowers leverage making the insurance unnecessary. The largest impact is in outlying and rural areas where these matter for first time buyers, but these do tend to be riskier as appreciation is not assured.
Appreciation risk?!