MBA Data Quantify Government Product Growth

The share of new mortgage applications for government-insured products is at its highest point since 1990, the Mortgage Bankers Association said. Based on data from its Weekly Applications Survey, the share of borrowers seeking Federal Housing Administration and Veteran's Affairs program loans for June 2009 is 36%, its highest level since November 1990, and up from 26% in May and 27% in June 2009. Almost four years ago, the share of FHA/VA applications was under 6%, in August 2005, the lowest since MBA started collecting this data in January 1990. Purchase applications for the government products made up just less than 39% of total purchase application volume; the average for the year was just under 37%. The split between conventional and government product applications on the refinance side, MBA said, has been more volatile, with FHA/VA refi applications going from over 38% in October 2008 to under 20% for most of this year. "Recent increases in mortgage rates have caused conventional refinance activity to drop much more sharply than government-insured refinance activity due to a combination of credit and LTV requirements. As a result, the government-insured share of refinance applications climbed to 33.6% in June," said Orawin Velz, MBA's associate vice president of economic forecasting.