On his first day in office, President Donald Trump raised mortgage rates for those buying a home for the first time and for borrowers with low incomes, reversing one of former President Barack Obama's final actions in the Oval Office.
Trump's administration announced on Jan. 20 that it was undoing the Federal Housing Administration's annual fee reduction for most individuals borrowing money, reports Bloomberg. Under the lower rates, somebody borrowing $200,000 would save $500 in the first year.
"More analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts," said a Jan. 20 letter from the U.S. Department of Housing and Urban Development to real-estate industry workers, according to Bloomberg.
Some Republicans criticized the rate cut, saying that it could have ultimately cost taxpayers more money in the event that the FHA had to cover too many bad loans.
"It seems the Obama administration's parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout," said House Financial Services Committee Chairman Jeb Hensarling of Texas, according to Housingwire.
Democrats said that Trump is taking money from middle- and working-class families who need it most.
"It took only an hour after his positive words on the inaugural platform for his actions to ring hollow," said Senate Minority Leader Chuck Schumer of New York, according to Bloomberg. "One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages."
John Taylor, president of the National Community Reinvestment Coalition, said that the move was "completely out of alignment" with Trump's promise to have the "government work for the people."
"Exactly how does raising the cost of buying a home help average people?" Taylor said through a spokesperson, notes Bloomberg.
According to the California Association of Realtors, those borrowing money from the FHA for a home would have saved an average of $860 per year, reports the Los Angeles Times.
"We hope that once the new administration has thoroughly reviewed the merits of the premium reduction the suspension will immediately be lifted," CAR President Geoff McIntosh said in a statement, according to the Los Angeles Times.
The rate reduction suspension is indefinite, and is not known when, if ever, any further decisions will come.