The introduction of tougher lending standards for mortgages insured by the FHA will provide another headwind to housing demand this year. While the removal of similar standards in 2016 did not have a noticeable impact on the share of FHA loans approved, the average credit quality of FHA borrowers has declined since then. Admittedly, the impact is not likely to be large, but it will be one more factor keeping home sales in check over the next year or so.
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