FHA-Backed Mortgage Applications Surge Ahead of Fee Increase

FHA-Backed Mortgage Applications Surge Ahead of Fee IncreaseApplications for home loans backed by the Federal Housing Administration surged ahead of the April 1 effective date for fee increases on mortgage insurance premiums.
Overall, mortgage applications for purchases last week only increased 1 percent, but there was a surge of 7 percent in applications for government loans.
Last year, FHA said it would raise by 10 basis points, or 0.1 percent, the annual insurance premium paid by borrowers on new FHA loans. The change went into effect April 1. This increase is expected to add $13 per month for the average borrower and will strengthen FHA’s capital position without limiting access to credit for qualified borrowers, U.S. housing officials say.
On a year-over-year basis, purchase applications are up about 4 percent, in line with the trend seen in home sales volumes.
When adding refinancing activity, overall mortgage applications decreased 4.0 percent last week from one week earlier, according to the Mortgage Bankers Association.
The Refinance Index decreased 6 percent from the previous week.
The refinance share of mortgage activity decreased to 74 percent of total applications from 75 percent the previous week.
The HARP (Home Affordable Refinance Program) share of refinance applications decreased to 28 percent from 29 percent the prior week. HARP helps “underwater” borrowers refinance mortgages held by Fannie Mae or Freddie Mac.
The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,500 or less), decreased to 3.76 percent from 3.79 percent, for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages, with jumbo loan balances (greater than $417,500), decreased to 3.85 percent from 3.90 percent, for 80 percent LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.48 percent from 3.51 percent, for 80 percent LTV loans.

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