FHA hikes mortgage fees to bolster reserves

(Reuters) - The cost of government-insured credit will increase slightly for U.S. homebuyers, as the Federal Housing Administration on Monday said it would raise up-front fees on the mortgages it insures to shore up its dwindling reserves.

The premiums FHA charges to insure mortgages will rise by 75 basis points, or 0.75 percentage point, on most 30-year loans, acting Commissioner Carol Galante told reporters on a conference call. The higher premium will apply to loans taken out after April 1.

The changes, which will raise about $1.25 billion for the FHA, will be wrapped into the overall cost of mortgages to dampen the impact on borrowers, she said.

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