The Obama administration cut mortgage-insurance premiums charged under a government program that’s popular with first-time home buyers with little money for a down payment, a move that may ease the burden of rising interest rates.
The annual fees the Federal Housing Administration charges to guarantee mortgages it backs are being cut by a quarter of a percentage point, the Department of Housing and Urban Development said in a statement on Monday. With the reduction, the annual cost for most borrowers will be 0.60 percent of the loan balance.
The change — which could be reversed after President-elect Donald Trump takes office — may hurt bond investors, as it speeds up repayment on some securities. Private insurers that compete with the FHA also could suffer. Shares of insurers MGIC Investment Corp., Radian Group Inc. and Essent Group Ltd. fell 2 percent to 3 percent after the announcement.
The reduction, which lowers the cost of a home for those who use the FHA, is charged to mortgage borrowers. HUD on Monday said the fee cut would save new FHA-insured homeowners an average of $500 this year. The cut would take effect on Jan. 27.
The Obama administration’s decision may cause tension with some Republicans who say a fee cut could put taxpayers at risk by reducing the amount of money the agency collects to buffer against mortgage defaults. The FHA is part of HUD, whose secretary sets the fees. The decision will put the spotlight on Ben Carson, nominated as HUD secretary of under Trump. Carson declined to comment on whether he would reverse the decision, according to a spokeswoman.
HUD Secretary Julian Castro said on a call with reporters that he had no reason to believe the cut would be altered by the Trump administration. Trump’s transition team received notification of the premium cut shortly before its public announcement, he said.
“It’s time the FHA passed along some modest savings to working families,” Castro said.
Mark Calabria, director of financial regulation studies for the libertarian Cato Institute in Washington, described the cut in an e-mail as a “bad idea, and irresponsible for an administration on its way out the door.”
The FHA doesn’t make mortgages. It sells insurance, paid by borrowers, on loans protecting investors in case of default. The program allows borrowers to get a mortgage with a down payment of as little as 3.5 percent and a credit score of as low as 580, on a scale of 300 to 850. That makes it one of the most forgiving mortgage programs and popular among first-time home buyers.
Some in the real-estate industry have been calling for another fee cut and heralded Monday’s move.
“Dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA,” William Brown, president of the National Association of Realtors, said in a statement.
The FHA last cut premiums two years ago. That cut, which came as rates dropped and lowered the annual fee for most borrowers to 0.85 percent from 1.35 percent, led to a wave of refinances.
The cut announced Monday will likely have less of an impact, in part because mortgage rates have risen sharply since Trump’s election. The effective FHA mortgage rate at the end of last year was about 4.32 percent, according to the Mortgage Bankers Association, compared to 3.71 percent for the week ended November 4.
Some of the cut’s impact could also be washed out if investors in Ginnie Mae-backed mortgage bonds, which include loans insured by the FHA, drive rates up after the cut.
The FHA required a $1.7 billion taxpayer infusion after the financial crisis, and just in 2015 met its statutory minimum capital requirements for the first time since then.
There is precedent for a change in mortgage fees shortly before a change in leadership. In 2013, Edward DeMarco, then acting director of Fannie Mae’s and Freddie Mac’s regulator, announced that he would direct the mortgage-finance companies to increase fees. Incoming director Mel Watt soon after said he would put a stop to the fee changes.

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There’s no substitute for the depth and breadth of information in a book that’s written by a successful person with a specialized point of view. Instead of quick fixes and hacks that rely on current trends, each of these 12 best-selling personal finance classics promote concepts that stand the test of time.
We listed these books by financial goals for 2017, so you can pick and choose. Or you can read all 12 — say, one each month — to really grow your knowledge of personal finance from many different angles.
Read: The Total Money Makeover by Dave Ramsey
Dave Ramsey’s ideals and advice are an extreme example of a debt-free lifestyle, but learning that the key to success is a laser focus on one goal at a time made all the difference. Diluting your efforts makes it take much longer to see results, making it more likely you will give up, Ramsey says. The first of these goals is saving $1,000 cash in a starter emergency fund, and he outlines how to do it.
The second is paying down debt using the “debt snowball” method, which we love because it pays off the smallest credit card first, again giving you that feeling of accomplishment and also freeing up money from that monthly payment to go to the next smallest balance card. And you can’t beat the sheer volume of debt payoff success stories that outline how they did it.
Read: The Automatic Millionaire by David Bach
We think David Bach coined the term “The Latte Factor” over a decade ago because he plainly illustrated the value of that same daily $2.50 spent on coffee (or whatever else) if saved and invested over 10, 20, or 40 years. Even though he wrote the book when interest rates for savings vehicles were quite a lot higher, the wisdom still applies.
He was also the first loud proponent of automatic bill pay, always paying yourself first (so savings start sooner rather than later) along with your bills so you never miss a payment, incur a late fee, or get any type of late payment penalty such as a ding to your credit score.
Read: Rich Dad, Poor Dad by Robert T. Kiyosaki
His business bankruptcy and lawsuit trouble aside, what we took away from this book is a new thinking about assets and liabilities. “An asset is something that puts money in my pocket,” Kiyosaki writes. “A liability is something that takes money out of my pocket. ” If you buy an expensive car and pay a big loan payment, it never puts money back in your pocket, so it is actually a liability.
By this view, even purchasing real estate (which most people view as their greatest asset) must be with an eye toward future value or current rental income. And you cannot depend on that future value. If you already took the equity out, or have no equity, or are upside down on your mortgage, you can see how it can quickly turn into a liability as well as how values can plummet, as so many found out when the real estate market crashed beginning in 2006.
We also learned from Kiyosaki that in real estate, to always be looking and to make a lot of low offers.
Read: Your Money or Your Life by Vicki Robin and Joe Dominguez
In this book, you’ll learn to evaluate whether your career choices are costing you “life energy,” and whether your job and spending are really in alignment with your life goals and values. When you do the math as laid out in the book, you may see your “true” hourly wage driven down in an eye-opening way. You can also see how you might be wasting time and money on things that aren’t really important to you at all.
Read: Think and Grow Rich by Napoleon Hill
In Think and Grow Rich, originally written in 1937 and based on interviews of more than 500 wealthy people of that time, Hill lays out the secrets he uncovered, arranged in 13 steps. What really spoke to us was a chapter about persistence. Do not miss the chapter called “The Devil’s Workshop. ”
Read: The 7 Habits of Highly Effective People by Stephen R. Covey
For anyone who is committed to changing a habit or reaching a goal, this book is a must-read. In it, you’ll learn that to successfully change any habit, you need not only the very strong desire to do it, but also the knowledge of how to do it and the skill to do it. And it all starts with how you view the world, yourself, and the people around you. You might be thinking, “Just tell me the seven habits already,” so if you want to know, get the book.
Read: The Money Book for the Young, Fabulous & Broke by Suze Orman
Need a book to give your young adult kids as they get their first jobs and move out on their own? A book that would answer any financial questions they might have, such as “What should I do about this 401(k) I was offered at my first job? What even is a 401(k)? ” This tome outlines the basics for every financial problem, choice, or term young adults might come up against. We especially liked her list “Don’t Do It,” as well as her usual spiel, “People first, then money, then things. ”
Read: Linchpin by Seth Godin
If you have any career aspirations, this is the book for you. In this book, you’ll learn that in order to be indispensable to the company you work for (thus, not fireable), you have to contribute something special that no one else does. You’ll learn that just doing the job as it’s written makes you a cog in the big wheel, as replaceable as any other cog. And who wants to just be a cog? The other thing we loved learning about in this book is how your “lizard brain” controls your daily thoughts and actions, and how to resist it.
Read: The Millionaire Next Door by Thomas J. Stanley, Ph. D., and William D. Danko, Ph. D.
The majority of the wealthy in America don’t live the stereotypical way we think they do, according to research conducted over the 20 years prior to the publication of this book in 1996. The authors studied the results of surveying and interviewing over 11,000 high-net-worth or high-income individuals and more than 500 millionaires to come to this opinion.
The secret that spoke most to us was, “They believe that financial independence is more important than displaying high social status. ” If you’re a data geek, this book is for you.
Read: The Way to Wealth by Benjamin Franklin
What could be more classic than a book written by Benjamin Franklin more than 200 years ago? What struck us in this book was Franklin’s connection between being debt-free and being independent. And who wants to give up their independence just to buy stuff?
Read: The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham
The smartest thing we learned from this classic, originally published in 1949, is to take a long-term view of investing. If you have neither the time nor interest in researching a stock purchase to see that it meets a set of value-investing criteria, then you should stick to index funds or mutual funds.
This book’s basic advice has guided many investors solidly to this day because it urges you to never skip any part of the research process when making a purchase. Get the revised edition, which includes more modern perspectives.
Read: How to Win Friends and Influence People by Dale Carnegie
Why is this book on a list of personal finance books? Because without other people’s cooperation, you cannot be successful at work or with your finances. The lessons encourage you to shift your thinking and relate differently to people, and the many stories show how they work. For example, the book advises you to forget about what you want and what you want to say, and focus on the needs and wants of the other person and listen. That, and not to criticize.
This book has a lot of advice you can put into place immediately, but it takes time for these ways of interacting to become habits. This book is a must if you’re in any kind of sales position — or want to have friends!
Whether these books were written 100 years ago or very recently has no bearing on the basic financial concepts described. And it doesn’t matter whether you agree with every concept outlined or every author’s opinion. Find what you like, what might work for you, and leave the rest.
This story originally appeared on Dealnews.com .

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Expecting a baby? Congratulations! Better put plenty of money in your savings account.
The Department of Agriculture says the estimated cost of raising a child from birth through age 17 is $233,610, or as much as almost $14,000 annually. That’s the average for a middle-income couple with two children. It’s a bit more expensive in urban parts of the country, and less so in rural areas.
The estimate released Monday is based on 2015 numbers, so a baby born this year is likely to cost even more. It’s a 3 percent increase from the prior year, a hike higher than inflation.
Since 1960, USDA has compiled the annual report to inform – and probably terrify – budget-preparing parents. State governments and courts also use the information to write child support and foster care guidelines. The main costs include housing, food, transportation, health care, education, clothing and other miscellaneous expenses.
Things to know about how much it costs to raise a child:
Up to a third of the total cost is housing, accounting for 26 to 33 percent of the total expense of raising a child. USDA comes up with those numbers by calculating the average cost of an additional bedroom – an approach the department says is probably conservative, because it doesn’t account for those families who pay more to live in communities that have better schools or other amenities for children.
The cost of raising a child varies in different regions of the country. Overall, middle-income, married-couple families in the urban Northeast spent the most ($253,770), followed by those in the urban West ($235,140) and urban South ($221,730). Those in the urban Midwest spent less ($217,020), along with those in rural areas ($193,020).
USDA estimates the annual housing cost per child in urban areas is $3,900, while it’s $2,400 in rural areas.
There were also differences depending on income. Lower-income families are expected to spend around $174,690 per child from birth through 17; higher-income families will spend a whopping $372,210.
The average middle-income family earns between $59,200 and $107,400 before taxes.
After housing, child care, education and food are the highest costs for families. For a middle-income couple with two children, food costs make up about 18 percent of the cost of raising a child. Child care and education costs make up 16 percent.
Education costs have sharply risen since 1960, when USDA estimated that those expenses were around 2 percent of child-rearing expenses. The report says this growth is likely due to the increased number of women in the workforce, prompting the need for more child care.
The numbers don’t even include the annual cost of college, which the government estimates is $45,370 for a private college and $20,090 for a public college.
New parents may flinch at the costs of diapers and baby gear, but it’s going to get worse. While a child costs around $12,680 when he or she is between 0 and 2, a teenager between 15 and 17 costs around $13,900 annually.
USDA says food, transportation, clothing and health care expenses all grow as a child ages. Transportation costs are highest for the oldest children, perhaps because they start driving, and child care and education costs are highest for six and under.
There is some good news for big families. Families with three or more children spend an average of 24 percent less per child. USDA says that’s because children often share bedrooms in bigger families, clothing and toys are handed down and food can be purchased in larger and more economical packages. Also, private schools and child care providers may offer sibling discounts.
In contrast, one-child households spend an average of 27 percent more on the single child.

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The bond market is wrestling with the Trump trade — and could continue to do so until the incoming administration and Congress can provide more details about their programs — particularly tax reform.
Buyers have been piling into Treasurys, sending prices higher and yields lower against a wall of uncertainty. At the same time, there is a giant short position, which can also help send yields lower as investors cover.
The Treasury market, particularly at the long end, has been attracting buying for a variety of reasons — one of which is the lack of clarity around the same programs of President-elect Donald Trump that drove yields sharply higher in the weeks after Election Day.
Another is the uncertainty about what is going on with China’s volatile currency. There is also higher demand for Treasurys by investors who are hedging corporate bonds, and corporate debt issuance in the first five trading days of the year was a whopping $62 billion for investment grade debt alone.
But Treasury strategists see the Trump trade as an important theme, now that the 10-year yield has retraced from its post election high of 2.64 percent on Dec. 15 to 2.36 percent Monday.
“Obviously we had strong corporate issuance. To start the year with that kind of a bang is very unusual. It’s weighing on yields. The 10-year was at 1.60 before the election. Even at 2.35, it’s 75 basis points higher. A lot of this is based on forward expectations of the new administration’s policy,” said Boris Rjavinski, rate strategist at Wells Fargo. “Some of the policies could be implemented very quickly. Some could involve protracted fights. ”
Goldman Sachs economists, in a note, said they expect the tax reform process to begin in March or April in the House of Representatives. They expect the House proposal to include “border adjustment,” or a tax on imported goods , as well as limitations on what interest corporations deduct. But the outlook for other issues is less clear, they wrote. That would include infrastructure spending and trade policy, including possible tariffs.
“The pace of implementation is now beginning to be questioned to some extent, and I don’t think anyone is really doubting we will get tax reform or fiscal stimulus, visa vis lower tax rates,” said Mark Cabana, head of short end rate strategy at Bank of America Merrill Lynch.
“We are in a big wait and see mode as to how policy will be implemented in the near term,” Cabana said.
Cabana said the market has been watching how the new Congress has been dealing with repealing Obamacare, its first act of the new session. “There may be some defunding, but there’s not a clear path of what it will be replaced with,” he said.
Economists have not built much extra growth into their 2017 forecasts from the Trump programs, though markets were lifted in a “reflation” trade on the hope that the economy would be boosted. The overhaul of corporate taxes was a big factor behind the optimism that has driven the Dow about 9 percent higher since the election, and there was hope that Congress and the White House would agree to a plan this year.
“Those micro details are definitely starting to permeate the conversation,” said George Goncalves, head of rate strategy at Nomura. “I’m amazed it took that long, but there was a lot of hope and excitement around it. It’s a new year. ”
In the weeks after the election, stocks rallied, the dollar gained and bond yields rose as traders viewed the combination of a Republican Congress and Republican White House as a strong setup for quick passage of tax and regulatory reform and fiscal stimulus. But in recent sessions, the market has watched every development in Congress with more interest than usual.
“We’re setting up for some showdown in the Senate with Cabinet-level confirmation hearings. That has reduced slightly some of the optimism that we would see something happen quickly in the second half of the year,” said Cabana.
On Tuesday, markets will also keep an eye on the confirmation hearing of Sen. Jeff Sessions for Attorney General. There is also a hearing for retired Marine Gen. John Kelly as Homeland Security secretary.
The confirmation hearing of former Exxon CEO Rex Tillerson as Secretary of State is scheduled for Wednesday. Also on Wednesday is Trump’s first news briefing since the election.
“There could be something interesting coming out of the hearings and his press conference. They’re forcing us to multitask,” said Art Hogan, chief market strategist at Wunderlich Securities. “Where the 10-year was — that was a pretty significant move in a short period of time. Some of that moderation we’re seeing is not just happening there. It’s happening in the financials. ”
Financial stocks have led the market higher since Election Day, with about a 17 percent gain. The S&P financial sector slid 0.8 percent Monday. Hogan said the pattern was also the same in what was a broader reflation trade.
Stocks ended Monday mixed with the Dow down 76 to 19,887, and the S&P 500 off 7 at 2,268. But Nasdaq closed at a record high of 5,531, up 10, lifted by a move higher in biotechs and Apple.
“All of the real rapid rotation trades needed some relief and to take a breather here. The real thing to me is they’re being replaced by something else. When the financials pulled back here with the 10-year, tech and health care jumped in significantly,” Hogan said. Financials had been rising on the idea that interest rates would be going higher and could move higher even more quickly, if Trump’s programs spark economic growth and inflation.
Goncalves said Treasurys have also benefited from some of the contradictions around the proposals. For instance, the idea of a border tax may harm the corporate supply chain and that would not be positive for growth.
“Because they’re not fleshed out, they’re inconsistent. They want a stronger dollar, but that’s bad for manufacturing. How do you square all these things? ” he said. “Some of the macro implications of changing how business is conducted itself falls into the uncertainty category for sure. ”
Besides watching Congress Tuesday, there is some data including JOLTs, job opening data and wholesale trade, both at 10 a.m. There is also NFIB small business survey at 6 a.m.
There is also a $24 billion three-year note auction Tuesday, the first of three auctions this week. The 10-year and 30-year auctions would be more important Wednesday and Thursday.
“I think the uncertainty factor around all this stuff also helps bring back more money into Treasurys,” Goncalves said.
He said the auctions could be like a “litmus test” for the market, and while they could support rates, he said yields could be even lower after the inauguration, as the markets sort out what the new administration will do.
“The U. S. economy and global economy has worked so hand in hand, that that’s going to cause friction … and that could raise risk premiums, and draw a bid for Treasurys. That may be what’s happening as well,” he said.
“They’ve been letting the currency slowly weaken. A weaker dollar would help stabilize the China situation because they are so dollar pegged,” Goncalves said. The currency has been volatile in both directions lately. “It was a controlled kind of weakening of the currency in response to both the outflows and speculative behavior that was happening as well. “

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