If it weren’t for government-insured lending, where would the mortgage market be today?
The government-insured share of mortgage application volume, largely FHA loans, reached its highest point since 1991 last month, according to the MBA.
A whopping 32.9 percent of mortgage applications taken during the month of October were government-insured loans, up from 10.3 percent in October 2007.
The highest level recorded since the MBA’s survey began in 1990 was a 43.8 percent share in February of that same year, while the lowest point was a mere 5.8 percent share in August 2005, when loose lending was all the rage.
And despite conventional loan application volume being down 49.7 percent in October from year-ago levels, government-insured loan volume is up 113.6 percent, the only saving grace to a dismal year in loan origination.
The MBA credits the rise in government-insured lending, namely FHA loans, to the rise in the FHA loan limit, the low down payment requirements, lower credit score requirements, and upfront mortgage insurance premiums.
Data from the Department of Housing and Urban Development also revealed that actual refinances from conventional to FHA loans surged 144.3 percent year-over-year in October.
One product behind the recent surge has been the FHASecure refinance loan, which is on pace to help 500,000 struggling homeowners refinance into more sustainable FHA-insured loans.
(photo: johncohen)
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