Government-insured mortgages triple in past year

In July, 29.1 percent of all mortgage applications accepted were for government-insured loans, primarily those from the Federal Housing Administration, compared to 8.4 percent in July 2007.

MBA reports that the government-insured share of mortgage applications has been increasing since February 2007 and only since the beginning of this year has the share exhibited significant increases; up from 9.4 percent in January.

Since the MBA survey’s inception in January 1990, the lowest recorded share was 5.8 percent in August 2005 and the highest was 43.8 percent in February 1990, according to a news release.

MBA attributes the increase to several factors, including the Economic Stimulus Act of 2008, which temporarily raised FHA and conforming loan limits, making FHA financing available to more borrowers. The passage of the Housing Bill in July made the higher limits permanent.

Statistics from the U.S. Department of Housing and Urban Development show that the level of conventional-to-FHA refinance applications has increased 317 percent on a year-over-year basis in July, the bulk of which is likely from subprime adjustable rate mortgage products. HUD also shows that the level of conventional-to-FHA refinance endorsements has increased 260.8 percent on a year-over-year basis.

Based on the MBA survey, application volume for government-insured loans was up 133.9 percent in July from a year ago, while application volume for conventional loans was down 50.2 percent, evidence of a shift from conventional to government-insured mortgages.  

The survey covers approximately 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  [[In-content Ad]]