FHA on pace for record year in backing mortgages
From Oct. 1 through mid-August, applications for FHA single-family-home mortgages were up 50%, to 2.52 million, from the same period a year earlier, according to a report Wednesday at USAToday.com. The rapid uptick in business for FHA means the agency is on track to record its busiest year.
FHA's market share of home mortgages, USAToday reports, has grown to more than 23% from just 3% in 2006. With tight credit markets, few home buyers today could qualify for a mortgage without the agency's assistance.
"Without FHA, the housing slide would be much more severe," Mark Zandi told USAToday. "We wouldn't be talking about a recovery now. We'd still be talking about a crash," said Zandi, analyst at Moody's Economy.com.
FHA typically backs those mortgages from first-time buyers or consumers with less-than-stellar credit, a market previously serviced by many now-defunct subprime lenders. The demand for FHA-backed mortgages in the past year has also been fueled in part by a first-time home-buyer tax credit of up to $8,000, which is set to expire Nov. 30.
While the number of mortgages insured by FHA has grown, data released Wednesday showed that the number of mortgage applications dropped last week..
The downturn for the week ending Aug. 28 marked a turnaround from the previous week's 7.5% jump in applications, said the report, issued by the Mortgage Bankers Association.
The report also showed that mortgage rates for 30-year fixed-rate mortgages, the most popular kind, fell last week to 5.15% from 5.24% in the previous week. Rates for 15-year fixed-rate mortgages were nearly unchanged, falling to 4.57% last week from 4.58% in the week ending Aug. 21.