Application volume for government-insured loans was up 133.9 percent last month compared to July 2007 as demand for conventional loans slipped fifty percent, according to the MBA’s Weekly Mortgage Applications Survey.
And 29.1 percent of all home loan applications tracked by the MBA in July were for government-insured loans (mainly FHA loans), up from just 8.4 percent in July 2007.
Amazingly, much of the growth has happened this year, as government loans only accounted for 9.4 percent of total application volume in January.
The MBA attributed this phenomenon to the raising of the conforming and FHA loan limits, and lower down payment and credit score requirements for FHA loans.
“Data from the U.S. Department of Housing and Urban Development (HUD) 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 ARM products,” the MBA said.
“Similarly, the level of conventional to FHA refinance endorsements has increased 260.8 percent on a year over year basis.”
Since the MBA began tracking loan applications in January 1990, the lowest recorded government-insured loan share was 5.8 percent in August 2005 and the highest was 43.8 percent in February 1990.
The group noted that the surge in government-insured loan activity highlights the need for FHA modernization.
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(photo: rvaphotodude)
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