FHA substantially reduced its fees on streamlines a few years ago to encourage existing FHA borrowers with higher interest rates to refinance.
At the same time, FHA increased its upfront and annual premiums for new borrowers purchasing a home or refinancing into a FHA single-family loan for the first time.
In FY 2013, only 91,500 conventional borrowers refinanced into a FHA loan, the lowest number since 2006, according to an FHA annual actuarial report that was released last Friday morning.
Overall, FHA endorsed 1.34 million single-family loans in FY 2013, up 13.5% from the prior fiscal year. Home purchase originations totaled 702,400, which is the lowest level since 2008.
“During FY 2013, FHA home purchase activity declined marginally by approximately 4%,” according to the actuarial report, which was prepared by independent auditors.
“This tracks with the general trend in the industry, but for FHA, purchase activity is nearing levels which were the norm in the early 2000’s.”