FHA Refinancings Plummet 21% in July
The refinancing boom for FHA lenders came to an end in July as loan production fell and purchase mortgage lending comprised over 60% of originations for the first time this year.
The Federal Housing Administration reported the July single-family endorsements totaled nearly 106,000 and 63% were purchase mortgage loans and 37% were refinancings.
Over the first three quarters of fiscal year 2013, refinancings averaged over 50%. But in June, refinancings fell to 45%.
The decline is partially due to the spike in interest rates this summer. But in early June, FHA implemented a new policy with regard to its annual insurance premium, currently 135 basis points. This annual premium can no longer be cancelled when the LTV ratio hits 78%. Borrowers must pay the premiums over the life of the loan.
Refinancings dropped to 39,400 in July from 50,240 in June. Purchase mortgage lending picked up nearly 8% from June to July as homebuyers took out 66,555 FHA-insured loans.
Overall, FHA single-family originations fell 5% in July from the prior month.