The Federal Housing Administration is cutting the annual premiums on mortgage insurance on home loans the agency insures by a quarter point.
The FHA projects that homeowners it insures will save about $500 per year with the new premiums.
The lower premiums will take effect January 27. They are coming after mortgage rates recently hit their highest levels in over two years.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Housing and Urban Development Secretary Julián Castro said in a statement.
The agency, which is part of the Department of Housing and Urban Development, offers mortgage insurance, often to first-time home buyers and those with low income or below top-notch credit. The insurance protects lenders in case of defaults.