The Federal Housing Administration (FHA) might be facing massive layoffs, possibly cutting 40% of its workforce, raising concerns about the future of an office that helps insure millions of mortgages.
The U.S. Department of Housing and Urban Development (HUD) insists the reports aren’t accurate but hasn’t exactly reassured anyone with details, leaving the mortgage industry wondering what’s next. If these cuts happen, delays in FHA loan processing could become the norm, further reinforcing the already-tough stigma around FHA financing.
Tammy Saul, CEO of Federal Hill Mortgage, put it bluntly: “When the seller sees an offer with an FHA letter, they’re scared of it already.” And while FHA loans make up a solid chunk of the market (14.5% of purchases last year), shrinking staff could make it even harder for first-time and lower-income buyers to compete.
On the slightly less terrible side, FHA loan volume is already down thanks to high rates, so fewer loans might mean less immediate chaos. But as mortgage expert Colin Robertson put it, “To say this is a very big deal would be a huge understatement.”
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DOWNPAYMENTS?
MORE LIKE UPPAYMENTS…
Homebuyers are digging deeper into their pockets, with the typical down payment rising to 16.3% in December, up from 15% a year prior, as surging home prices and high mortgage rates force buyers to bring more cash to the table.
In dollar terms, the average down payment climbed 7.5% to $63,188, the biggest jump in five months, as some buyers put more down to shrink their monthly payments. But Redfin’s senior economist Sheharyar Bokhari cautions that “bigger isn’t always better,” since the market is shifting in buyers’ favor, giving them more room to negotiate and save their cash for renovations or other investments.
Cash purchases made up 30.6% of home sales in December, down from their peak last year when mortgage rates hit nearly 8%, as fewer real estate investors and deep-pocketed buyers chose to pay in full. Meanwhile, FHA and VA loans are holding steady, continuing to give first-time buyers and veterans a way into the market, though conventional loans still reign supreme making up 78.4% of all mortgaged home sales.
And as always, trends vary by location: San Francisco buyers put down a hefty 26.4% on average, while Virginia Beach buyers averaged just 3%, and cash ruled in West Palm Beach (50.4%) but was a rarity in tech-heavy markets like Seattle and San Jose (under 19%).
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