Recent hikes in FHA premiums appear to be causing a shift in government-backed mortgage programs, according to new figures.
During the first half of fiscal year 2012, the origination of Veterans Affairs-backed home mortgages soared 40% while production of Federal Housing Administration loans fell 24%. The comparison is to the same period in 2011. (Fiscal 1H ended March 31.)
Both government-backed programs offer low downpayment loans, but FHA has been raising mortgage insurance premiums in an effort to rebuild cash reserves and cover risks.
The higher premiums appear to be stifling FHA refinancings in particular. FHA refis fell 37% to $37.7 billion in the first half, while VA refis jumped 68% to $35 billion.
From Oct. 1 through March, lenders originated $54 billion in VA loans, compared to $38.4 billion during the same period in FY 2011. VA purchase mortgage transactions were relatively unchanged at around $18 billion.
Total FHA originations of forward single-family loans fell to $94.7 billion during the first half of FY 2012 from $124.9 billion in the same period in FY 2011. FHA loans used to purchase homes fell 12% from the first half of FY 2011 to $57 billion in 2012.
