FHA, VA loan programs post stronger quarter

A mini-boom in refinances drove year-over-year loan count and volume increases for Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, but United States Department of Agriculture (USDA) loan activity fell off, according to figures provided by the three agencies.

Loan counts and volumes for the second quarter of fiscal year 2015 (January to March) generally ran above those in fiscal year 2014, but remained well behind the 2013 totals.

At the halfway point in the fiscal year, loan counts for all government-backed loan types totaled 766,432, up more than 22 percent compared to the first two quarters of fiscal 2014. Volumes were up 34 percent to $153.4 billion.

FHA loans, a program popular with first-time homebuyers, didn’t get a huge boost from its move to cut the annual insurance rate, the agency said in its quarterly report to Congress. In January, the Obama administration reduced premiums from 1.35 percent to 0.85 percent to attract more first-time homebuyers. Quarter over quarter, loan counts declined marginally, but volumes rose.

In the report, the agency noted that refinance activity jumped significantly and “endorsement volume may rise” through the year. Compared to a year ago, FHA did have a strong quarter.

In the second quarter of fiscal year 2015, FHA loan counts increased 22 percent to 199,962 loans compared to the same quarter a year ago. Overall volumes jumped 31 percent to $37.1 billion.

FHA reported that FHA-to-FHA refinance counts were up 67 percent year over year to 52,099, and overall refinance numbers were up 11 percent.

VA loan numbers rise, USDA falls

VA loans, a low-interest, zero downpayment program available to eligible veterans, also drew more interest. The numbers increased 65 percent year over year to 149,289 loans, up from a count of 90,590 from a poor second quarter in fiscal year 2014, the agency reported. Volumes were up 82 percent to $36.5 billion from just $20 billion in the quarterly figure a year before.

“Volume is up overall, and largely driven by the sharp increase in interest rate refinance loans,” VA Spokesman Terry Jemison said.

“We typically see upswings in [refinances] when rates take a dip,” he said.

The story was the opposite with USDA loans, however.

The year-over-year counts for the guarantee program declined by nearly 8 percent to 27,394 loans, and volumes dropped nearly 5 percent to $3.8 billion. The USDA’s direct origination program, however, drew more interest than last year. Direct loan counts rose 15 percent to 1,383 loans, whereas volumes were up almost 20 percent to nearly $170 million.

The agency said refinances have dropped sharply in the guarantee program since 2013, and “remain at low levels.”

“The housing industry as a whole has not been as strong as analysts projected because of a variety of reasons,” USDA said in a provided report.

The FHA share of total mortgage applications accounted for just over 14 percent, whereas the VA represented a 11.5 percent share and USDA just over 1 percent, the Mortgage Bankers Association reported in its latest weekly survey.

Reference..Scottsman Guide