Borrowers Rush to Secure Govenment Backed Loans

Daily Real Estate News  |  April 6, 2011  |
Borrowers Rush to Secure Gov’t-Backed Loans

Purchase applications for mortgages increased 6.7 percent last week, reaching its highest level of the year, according to the Mortgage Bankers Association.

The MBA reports that government loan applications reached their highest level since May 2010, increasing 10.3 percent last week compared to the week prior.

Michael Fratantoni, MBA vice president of research and economics, attributes the surge to borrowers who were likely motivated to apply for government loans before a scheduled increase in FHA insurance premiums, which became effective last Friday.

Despite the sharp rise, however, purchase volume in mortgage applications still remains relatively low by historical standards, at levels last seen in 1997, Fratantoni adds.

Also, while purchase applications soared last week, applications for refinancing declined 6.2 percent last week, the lowest level since February.

Source: “Apps for Government-Backed Mortgages Surge Ahead of FHA Premium Hikes,” The Real Deal Online (April 6, 2011)