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Government-insured mortgages to increase

According to a recent announcement, government-insured mortgage costs are expected to increase.

According to a recent announcement, government-insured mortgage costs are expected to increase.

The Federal Housing Administration recently announced that the cost of government-insured mortgages will increase for new homebuyers in the United States.

The FHA stated that its will raise the up-front fees on the mortgages the agency insures in an attempt to increase its decreasing capital and encourage private lenders to come back into the market.

The FHA backs close to a third of all new mortgages in the United States, but said the premiums it charges to insure mortgages will increase by 75 basis points, which equals 0.75 percentage points, on most 30-year loans.

"This change should reduce FHA volume, but we question how much this will benefit the banks," said Jaret Seiberg, Guggenheim Partners analyst, to Reuters. "The banks may decide to portfolio some of these loans, but we believe the vast majority will still be sold to Fannie and Freddie."

The agency is also planning to collect about $1 billion from the Obama administration's settlement with the country's largest lender over irregular foreclosure paperwork.

According to a recent Wall Street Journal article, mortgages could possibly be lower, but the spread between mortgage rates potential homebuyers see and the benchmark interest rate investors ask for is keeping the industry from recovering quicker, which might keep Americans from securing moving trucks to move into new homes.