Home/Mortgages/FHA Mortgage Applications Continue to Decline

August 22, 2011 (Shirley Allen)

Mortgage loan applications to the Federal Housing Administration (FHA) were 33 percent lower in July than they were a year ago as refinance applications declined 63 percent from last year according to the agency’s Single-Family Outlook report.

The FHA had a total of 115,263 loan applications in July of this year compared to 173,068 in July of 2010, a decrease of 33.4 percent. Monthly applications also declined from 131,796 in June.

The most significant cause of the decline was due to a large drop in refinance applications compared to a year ago. In July of last year, the FHA recorded 83,711 refinance loan applications, while in July of this year, there were only 31,081 refinance applications, a decrease of 52,630 applications.

Year-over-year, purchase loan applications were down 4.8 percent, with July 2011 registering 76,543 purchase applications compared to 80,396 purchase loan applications in July 2010. Compared to June, purchase loan applications declined 12.7 percent from 87,674 applications.

The number of completed FHA insured loans also dropped nearly 37 percent in July compared to last year. In July 2010, the FHA insured 144,514 loans, while in July of this year, the FHA insured 91,533 mortgages.

Completed purchase money mortgages were down 37.1 percent from 108,608 in July 2010 to 68,336 in July 2011. Similarly, completed refinance transactions dropped 41.1 percent from 30,005 in July of last year to 17,683 in July 2011.

The average FICO score for a homebuyer securing a FHA loan in July was 699. The average FICO score a year ago was 697. For refinanced transactions, the average FICO score in July was 696, while the average score a year earlier was 695.

At the end of July, the FHA had 7,202,951 insured single-family mortgages in its portfolio with an amortized balance of $1,003.2 billion.

The serious delinquency rate, homes that were 90 days or more past due, was 8.3 percent in July, up from 8.2 percent in June, but down from 8.6 percent in July 2010.

Tags: FHA, Single-family Outlook report, loan originations, purchase loans, refinance loans, FICO score, serious delinquency rate