GNMA issuance in June and May topped $41 billion for the first time since December 2012.
FHA and VA originations remained strong in June. FHA endorsed 111,660 loans and VA endorsed 53,000 loans.
Going forward, FHA loan volume is expected to slow due to high insurance premiums and a new policy that requires borrowers to pay annual insurance premiums over the life of the loan. In addition, Congress is considering legislation that could place an additional drag on FHA lending.
In a recent prepayment report, Barclays mortgage strategist Wei-Ang Lee noted that the VA share of GNMA originations is on an upward trend and averaging about 25% to 35%.
If the FHA share of high LTV lending goes back to historical norms, the VA share of GNMA securitizations could increase to 40% to 50%. “This will likely occur gradually over a long period,” Lee said.