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Federal Housing Administration to reduce annual insurance premiums, saving homeowners avg $500 this year

CNBC logo CNBC 1/9/2017 Berkeley Lovelace Jr.

Row of homes in Little Rock, Ark.  Wesley Hitt/Getty Images © Wesley Hitt/Getty Images Row of homes in Little Rock, Ark. Wesley Hitt/Getty Images U.S. Housing and Urban Development Secretary Julián Castro said on Monday the Federal Housing Administration will reduce the annual premiums most borrowers will pay by a quarter of a percent.

The FHA is reducing its annual mortgage insurance premium by 25 basis points for most new mortgages with a closing or disbursement date on or after Jan. 27. The new rates are projected to save new FHA-insured homeowners an average of $500 this year, Castro said.

"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," said Castro.

"This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers."

The new rates come as the FHA enters a fourth straight year of improved economic health, the administration said. The FHA gained $44 billion in value since 2012.

This story is developing. Please check back for further updates.

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