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Even though the rates for 30-year fixed FHA mortgages have dropped from 4.81 since March of 2011 to their current rates which have been hovering in the high 3% to low 4% range, it seems that’s not helping raise the number of FHA applications. In spite of the low rates, potential borrowers seem cautious due to the slow recovery of the housing crisis, tougher lending requirements, and nagging unemployment figures. MarketWatch reported on March 7th that mortgage activity across the board had fallen for the fourth straight week.

Because of a new borrowers cost enacted by Congress, that goes into effect on April 1, 2012, the number of FHA applications is expected to remain flat. With the new regulations, FHA loan recipients will now be responsible to pay .26% of the loan amount. For example, a borrower with a $200,000 mortgage will be responsible for an extra $5,400 over the 30-year term. Congress also directed the FHA to raise its annual mortgage insurance premium by .10%. Although these changes are making potential homebuyers more hesitant, in the long run it is projected that they will help stabilize a shaky situation and buyers who are more qualified to commit with step up.