|Mortgage bankers issued a report indicating that the share of government mortgage activity is at the highest level in more than 17 years.
One-third of loan applications taken during October were for government-insured mortgages, the Mortgage Bankers Association reported today.
The trade group noted that government activity primarily consists of loans insured by the Federal Housing Administration.
Government share reached its highest level since February 1991. In October 2007, government applications accounted for 10 percent of overall activity.
"This increase in the share of government-insured mortgage applications provides further evidence that there are still loans available to qualified borrowers, particularly through the FHA," MBA Chairman David G. Kittle said in the announcement. "The mortgage market remains fully operational and lenders are working to ensure borrowers with sufficient down payment and good credit have the opportunity of homeownership."
Freddie Mac projects government originations will go from $120 billion last year to $286 billion this year.
MBA attributed the rising significance of FHA programs to higher loan-to-values, more flexible mortgage insurance options and a temporary increase to $729,750 in the maximum FHA limit through the Economic Stimulus Act of 2008. The association noted that the passage of the Housing Bill in July 2008 permanently increased the limit to $625,500 in 2009.