Press Release: October 20, 2021

 

FHA Share of Home-Purchase Financing Hits,
5-Year Low, According to HousingPulse Survey
 

WASHINGTON, DC (October 20, 2021) – FHA’s share of home-purchase financing fell to the lowest level in at least five years in September, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. High fees on FHA mortgages have prompted buyers that can qualify for financing from other sources to shift to mortgages from Fannie Mae and Freddie Mac as well as other outlets.

Mortgages guaranteed by the FHA accounted for financing on 18.2% of home purchases in September, based on a three-month moving average. That’s the lowest market share for the FHA since 2009 and the height of the mortgage crisis.

FHA’s share of home-purchase financing has declined fairly steadily since September 2011, when the loans accounted for financing on 29.4% of home purchases. By September 2013, FHA share of home-purchase financing had slipped to 21.9%.

The Department of Housing and Urban Development has significantly increased fees on FHA mortgages in recent years in an effort to boost the health of the agency’s mortgage insurance fund. Higher fees and the overall economic recovery have helped improve the health of the FHA, prompting mortgage and real-estate trade groups to push for HUD to start lowering the FHA’s annual mortgage insurance premiums along with elimination of the requirement that mortgage insurance be kept in place for the life of the loan.

HUD has resisted those calls to this point, prompting the FHA to cede market share to Fannie Mae, Freddie Mac and the Veterans Administration, among other home-purchase financing sources.

Fannie and Freddie accounted for a combined 18.7% share of financing for home purchases in September, up from a 13.7% share in September 2011. And the VA share of home purchase financing has increased in that time from 5.0% to 8.1%.

Private mortgage insurance companies have reduced their prices, making GSE mortgages with downpayments of less than 20% more attractive than pricing on FHA mortgages. And VA mortgages generally offer lower payments compared to FHA financing along with no downpayment requirement, for those who qualify.

Meanwhile, mortgage-financing delays are increasingly common across product types, according to exclusive data from HousingPulse. Some 58.3% of delayed closings of home purchases in September were caused by mortgage-related issues, based on a three-month moving average, up from a 50.7% share as recently as March.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

For more information on the survey, contact John Campbell at Campbell Surveys at (202) 363-2069 or jcampbell@housingpulse.com.
 

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10/20/2014