FHA Loan Activity Reaches Record Highs At Years End

by Heindrick So
January 13th, 2009

FHA Applications Post Record Numbers in December
As we’re finally getting reports in for the month of December 2008, the numbers for the first two weeks look quite promising. For December 1st to 15th, FHA applications reached a high of 136,685 – a jump of 77.7 percent over the previous period. As for their annual pace, December’s performance was able to push the FHA past the 4 million mark for applications. 

During this period, 76,401 mortgages were insured by FHA, with purchases and refinances accounting for 43,200 and 28,107 respectively. Unfortunately, no Hope For Homeowners mortgages were insured. 

Low Mortgage Interest Rates Spark FHA Refinance Sector
Of the FHA loan applications, 45,945 applied for purchase loans while 82,494 applied to refinance their existing loans. Although more purchase loans were insured by the FHA, the sheer number of refinance applications showed the public’s desire for record low mortgage rates. For those currently considering an FHA refinance cash-out, 32.2 percent of all refinances were cash out transactions in the first two weeks of December. 

In addition, 77 percent of the FHA purchase transactions resulted from first time home buyers. Of these 33,275 first time home buyers, 31.8 percent were from minority families. 

As stagnant homes and oversupplied inventory continues to be a problem around the nation, it’s good to see that many first time home buyers are still able to rely on FHA. While stricter lending guidelines have some homeowners sitting on the sidelines, these numbers show that it is still quite possible to finance a home in this market.

As a reminder, some of the benefits of an FHA purchase loan is the relatively low down payment of 3.5 percent and competitively priced interest rate. As typical conventional loans may require upwards of 5 to 10 percent down, FHA has become quite the popular option for many buyers. For more information regarding an FHA purchase loan, be sure to check out our FHA lender directory.

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This entry was posted on Tuesday, January 13th, 2009 at 7:36 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One Response to “FHA Loan Activity Reaches Record Highs At Years End”

  1. Chandler Real Estate Says:

    Speaking with a mortgage consultant yesterday, he told me that nearly 80% of the loans he is doing are FHA. This is why the termination of Down Payment Assistance had such a big impact on the market.

    Imagine where the market would be if FHA weren’t so flexible and either buyers had no options to get financing without a significant down payment (Phoenix is a ‘declining market’ so that 10% is often the minimum down payment required). I do wonder how long FHA foresees being used for so many loans.

    Thanks for the updates.

    David Lorti

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