In what is likely his final act as the Secretary of Housing and Urban Development, Julián Castro today announced a reduction in FHA mortgage premiums from 0.85 percent to 0.60 percent.

According to an announcement from HUD, the FHA’s annual mortgage insurance premium (MIP) will decline by 25 basis points (or a quarter of a percent), and will save new FHA-insured borrowers an average of $500. The new premiums will affect homebuyers with FHA mortgages that close on or after Jan. 27, 2017.

In HUD’s statement, Castro said that the MIP reduction is a result of the FHA’s improving financial health.

“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,” Castro said.

The FHA’s finances took several blows after the housing downturn, which forced it to aggressively raise annual mortgage premiums; ultimately premiums rose 145 percent, climbing from 0.55 percent all the way to 1.35 percent.

Since 2012, though, the FHA’s Mutual Mortgage Insurance Fund has gained $44 billion in value, and as of 2016, the fund stood at 2.32 percent of all insurance in force, which is above the 2-percent threshold required by law.

The industry applauds the FHA’s decision

The FHA’s announcement has been applauded by the housing industry. David H. Stevens, the president and CEO of the Mortgage Bankers Association, spoke of how the lower premiums will benefit consumers, though he hinted at further work that must be done.

“Reducing the cost of FHA loans benefits borrowers, but other changes to reduce uncertainty for lenders would be required to truly invigorate the FHA program,” Stevens said in a statement. “MBA looks forward to continuing to work with all stakeholders, including the new Administration, to ensure the safety and soundness of the FHA program.”

The National Association of Realtors struck an even more positive chord in its statement.

“FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William E. Brown. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track.”