Higher insurance premiums are taking a toll on FHA single-family originations and it is also causing a shift in the credit scores of its borrowers.
New Federal Housing Administration data show that 40.5% of new borrowers in the fourth quarter of fiscal year 2013 had credit scores of 640 to 679, up from 34.2% a year ago.
The percentage of borrowers with credit scores above 719 dropped to 23.6% in the fourth quarter (ending Sept. 30), down from 31% in 4Q 2012.
The new data also show there was spike in applications for FHA-insured reverse mortgages in September due to significant changes in product choices.
Applications for Home Equity Conversion Mortgages jumped to 16,000 in September from 8,167 in the prior month. Over 13,400 seniors applied for the adjustable-rate Standard product after FHA eliminated the fixed-rate Standard product.