FHA raises premiums charged to borrowers: report

(Reuters) - The Federal Housing Administration, a U.S. agency that is rapidly shouldering more of the risk on home loans, raised the premiums it charges for insuring mortgage repayments, the Wall Street Journal said.

The FHA said the upfront premiums charged to most borrowers would be 1.75 percent of the loan amount, effective October 1, up from 1.5 percent.

On a $300,000 loan, the new upfront premium works out at $5,250, up from $4,500. The annual premiums paid by borrowers would remain at 0.50 percent to 0.55 percent of the loan balance, the paper reported.

The FHA is taking a far bigger share of the market because investors last year began shying away from buying mortgage securities that were not backed by a federal agency or government-sponsored mortgage investors Fannie Mae FNM.N and Freddie Mac FRE.N, the Journal said.

Fannie and Freddie have become more cautious about buying or guaranteeing mortgages because heavy losses have depleted their capital.

Borrowers can get FHA-insured loans with down payments as low as 3 percent.

(Reporting by Sweta Singh in Bangalore, editing by Will Waterman)