Government insured home loans jumped to 36 percent of all U.S. mortgage applications in June, the highest since 1990, the Mortgage Bankers Association said.
Federal Housing Administration and Veterans Administration loan applications increased in market share from 25.7 percent in May and from 27 percent a year earlier, the Washington-based trade group said today in a statement.
Borrowers are turning to government backing to offset stricter lending by banks. About 50 percent of banks tightened requirements for prime borrowers in the first quarter, asking for bigger down payments and more savings, the Federal Reserve said in June.
“Credit standards are tightened so much, home-buyers have turned to the government,” said Michelle Meyer, economist for Barclays Capital. “I think that as the financial markets normalize and credit markets heal, you’ll start to see the share of conventional mortgages increase again.”
The Mortgage Banker’s index of applications to purchase a home or refinance a loan rose 11 percent to 493.1 in the week ended July 3. Purchase applications rose 6.7 percent while requests to refinance gained 15 percent.
Mortgage Rates
In June, the government-insured share of purchase applications climbed to 38.6 percent from 27.8 percent a year earlier, the MBA said. The federally backed share of refinance applications increased to 33.6 percent. It touched a record high 38.4 percent in October, according to the MBA.
Home loan rates climbing from a record low 4.78 percent in April are one reason buyers are looking for other ways to reduce costs. The 30-year fixed U.S. mortgage rate was 5.2 percent this week, according to McLean, Virginia-based Freddie Mac.
“A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans,” said Orawin Velz, associate vice president of economic forecasting for MBA. “In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”
Federal Housing Administration and Veterans Administration loan applications increased in market share from 25.7 percent in May and from 27 percent a year earlier, the Washington-based trade group said today in a statement.
Borrowers are turning to government backing to offset stricter lending by banks. About 50 percent of banks tightened requirements for prime borrowers in the first quarter, asking for bigger down payments and more savings, the Federal Reserve said in June.
“Credit standards are tightened so much, home-buyers have turned to the government,” said Michelle Meyer, economist for Barclays Capital. “I think that as the financial markets normalize and credit markets heal, you’ll start to see the share of conventional mortgages increase again.”
The Mortgage Banker’s index of applications to purchase a home or refinance a loan rose 11 percent to 493.1 in the week ended July 3. Purchase applications rose 6.7 percent while requests to refinance gained 15 percent.
Mortgage Rates
In June, the government-insured share of purchase applications climbed to 38.6 percent from 27.8 percent a year earlier, the MBA said. The federally backed share of refinance applications increased to 33.6 percent. It touched a record high 38.4 percent in October, according to the MBA.
Home loan rates climbing from a record low 4.78 percent in April are one reason buyers are looking for other ways to reduce costs. The 30-year fixed U.S. mortgage rate was 5.2 percent this week, according to McLean, Virginia-based Freddie Mac.
“A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans,” said Orawin Velz, associate vice president of economic forecasting for MBA. “In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”
