WASHINGTON, January 8 (Sputnik) — The US Federal Housing Administration (FHA) will lower premiums for low-income new borrowers purchasing homes in an effort to raise home prices and boost the economy, US President Barack Obama announced on Thursday.
"I'm going to take a new action to help even more responsible families stake their claim on the middle class and buy their first new home," Obama said in Phoenix, Arizona. "Starting this month the FHA will lower its mortgage insurance premium rates enough to save the average new borrower more than $900 a year."
The FHA, which underwrites loans for home buyers who can afford only small down payments, will lower premiums from 1.35 percent to 0.85 percent under the plan.
Obama said the move would allow several hundred thousand people to "get their cut of the American Dream," while also helping to lift the whole real-estate market and boost construction jobs following the 2008 housing collapse.
In 2008, a US housing bubble popped leading to a financial crisis and recession as millions of home owners lost value in their homes and hundreds of thousands were forced into foreclose.
Since bottoming out in January 2012, real-estate prices in the United States have risen nearly 25 percent, according to US National Home Price Index. Housing prices across the country remain below the 2008 peak.
