Federal Housing Administration (FHA) loan counts and volumes were up significantly during the third quarter, far outpacing other government programs, according to Scotman Guide, a trade magazine for the mortgage origination industry.
FHA volume rose by 101 percent to $66 billion during the federal government’s third quarter, compared with the same period last year; Loan counts rose 73 percent to 334,399. Both volumes and loan counts returned to 2013 levels after experiencing a weak 2014, the FHA said.
Taking a look at the first nine months of the year, the FHA said volumes rose 43 percent to $138.3 billion, compared with the same period in 2014. Loan counts rose 30 percent to 736,113 compared to the first nine months of last year.
The FHA said the huge increases were driven by refinances, including a 257 percent jump in borrowers who refinanced current FHA loans into new FHA loans at a lower rate in Q3. Overall, refinance counts increased by 198 percent compared with Q3 2014.
FHA also said that a 50 basis-point cut the Obama Administration made to annual insurance premiums has made the agency more competitive with conventional loan programs, which recently rolled out low-downpayment programs. The cut, made in January, lowered premiums from 1.35 percent to 0.85 percent of overall loan value, which the government said could save borrowers $900 per year.
Volume and loan counts for Veterans Affairs (VA) loans also outpaced the prior year’s totals.
Volume rose 58 percent to $38.7 billion, while counts rose 46 percent to 161,559. VA spokesman Terry Jemison attributed the increases to interest-rate reduction refinances, as well as efforts to work with veterans and lenders to speed up the time to issue certificates of eligibility. By using the VA’s electronic system, the VA was able to cut the average time to issue certificates from an average of 24 days to just two days during Q3, Jemison said.
However, U.S. Department of Agriculture (USDA) loan volume dropped by 9.3 percent to $4.9 billion compared with Q3 2014. Loan counts also fell 11.7 percent to 35,445 compared with the same period last year. Scotman Guide noted that in February, a second phase of map changes to USDA boundaries went into effect, but USDA officials denied that the change contributed to the drop in originations, and instead chalked it up to a lack of affordable housing options for buyers in rural areas.