In a move designed to bring more first-time home buyers into the housing market, President Obama said Wednesday the Federal Housing Administration (FHA), the government insurer of home loans, will lower its annual insurance premiums from 1.35 percent to 0.85 percent.

In a statement, the White House said the move was part of the president's efforts `"to expand responsible lending to creditworthy borrowers.'' The president is scheduled to talk about improvements in the housing market at a speech on Thursday in Phoenix, one of the hardest-hit markets of the housing crash.

Stocks of the nation's home builders rose on the news Wednesday, while those of mortgage insurers fell.

"This action will make home ownership more affordable for over two million Americans in the next three years," said Julián Castro, U.S. Department of Housing and Urban Development Secretary. "Since 2009, the Obama administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we're helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures."

Mortgage bankers praised the decision. "It couldn't come at a better time," said David Stevens, CEO of the Mortgage Bankers Association. "February is the beginning of the spring market. I think it will have a definitive impact particularly in the first-time home buyer market."

For the typical FHA applicant, the reduction in premiums means a savings of about $80 on their monthly payment, according to CoreLogic's chief economist, Sam Khater.

"So it's positive news from a consumer welfare perspective, especially for first-time home buyers, which account for the majority of FHA's business," he said, adding, "However, I think the marginal impact on sales will be small because potential buyers make the decision to purchase based on trigger events, such as a new job, marriage, kids, etc. Changes in affordability only impact how much home they can buy."

The FHA had been the only low down payment product available, with a minimum 3.5 percent down, but recently Fannie Mae and Freddie Mac announced a new 3 percent down payment product that would require private mortgage insurance. The product would compete directly with the FHA and could have offered some borrowers a cheaper option if they had a good credit score.