Fence-Sitting Homebuyers Face FHA Fee Hike Deadline

Bothrnapplications for FHA-guaranteed mortgages and FHA endorsements were lower inrnJanuary than in the previous month or in January 2010. Reduced loan demand was reflected across all subsets,rnpurchases, refinances and mortgages for first-time buyers.</p

Applicationsrnfor FHA mortgages totaled 103,991 in January compared to 112,500 in Decemberrnand 126,043 a year earlier.  Thernyear-over-year figure reflects a drop of 17.5 percent.  There were 55,417 applications for mortgagesrnto purchase homes and 41,178 to refinance. rnThis was a 3.4 percent decrease in purchase applications since December andrna 21.6 percent change from January 2010. rnApplications to refinance were down 12.1 percent quarter-to-quarter and 16.9rnpercent over the longer period.</p

FHArnendorsed 119,521 mortgages in January compared to 133,603 in December andrn158,612 in January 2010.  January numbersrnare lower by 10.5 percent and 24.6 percent respectively.  Purchase mortgages totaled 63,887 compared torn66,165 (-3.4 percent) and 90,030 (-29 percent) in the earlier periods.  47,429 (74.2 percent) of the purchasernmortgages went to first time buyers compared to 48,539 (73.4 percent) andrn90,030 (56.8 percent) in December and in January 2010. </p

Home Equity Conversion (HECM) or so-called ReversernMortgages for senior citizens represented 5.4 percent of FHA endorsementsrncompared to 4.9 percent in December and 4.8 percent a year earlier. </p

Year-to-date figures also show a substantialrndecrease in activity between FY 2010 and FY 2011.  Total applications are 26.7 percent lowerrnwith purchase mortgages down 34.3 percent and refinancing off 22.1rnpercent.  Total endorsements are 24.1rnpercent off of the 2010 pace with most of the fall-off accounted for by thernpurchase sector which was down 34 percent. rnRefinancing endorsements dropped 8.1 percent and HECM endorsements arernat -23.3 percent the 2010 level. </p

Mortgage Insurance -in-Force in January totaled 5,882,984,rnan increase of 1 percent month-over-month and 16.3 percent over the Januaryrn2010 total of 5,917,805.  The totalrnunpaid principal balance amount is $947.8 billion.  The portfolio has a current delinquency raternof 8.9 percent with 612,443 loans over 90 days delinquent.   In December the rate was 8.8 percent and onernyear earlier it was 9.2 percent.</p

The weighted average FICO score for FHA mortgagesrnwas 703, one point higher than the previous month and nine points above thernscore a year earlier.   </p

FHA took an average of 5,735 applications per day inrnJanuary.  The average processing timernfrom application to closing was 8.1 weeks, up from 7.6 in December but about thernsame as a year earlier and 4.0 weeks from closing to endorsement, 1.3 week lessrnthan a year ago.</p

These figures are from the Single-Family OperationsrnReport for January issued this week by the Department of Housing and UrbanrnDevelopment.  FHA mortgages have risenrndramatically in popularity since the beginning of the housing crisis but thernagency has also raised upfront and annual premiums in the past year. Declining loan demand in January is no surprise given the uptick in mortgage rates we witnessed. Rates are now off those highs but loan production has yet to pickup.  We are curious to see how the FHA’s decision to raise the annual mortgage insurance premium will impact loan demand before the new fee structure goes into effect on April 18th.</p

Perhaps buyers will rush to beat the deadline?

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