Numbers reflecting first-time homebuyers from getting Federal Housing Administration (FHA) loans and those getting U.S. Department of Agriculture (USDA) loans couldn’t have been more different regarding 2015. Bolstered by a wave of refinances and a cut to the insurance premium in January of last year, FHA loan counts and volumes continued a year-long surge in the fiscal fourth quarter, RealtyTrac reported.
FHA’s overall loan counts in fiscal 2015 (October 2014 through September 2015) rose nearly 42 percent to 1.1 million loans. Volumes were up nearly 58 percent to $213.1 billion. These increases have been driven largely by refinances of existing FHA loans, which rose dramatically in the fourth quarter. The program also received a big boost from a 0.5 percentage-point cut in the annual insurance premium in January.
“The reduction in the insurance premium on FHA really did have an impact, along with the lower interest rates that we saw this year,” RealtyTrac Vice President Daren Blomquist told the Scotsman Guide News. “That combination was a sweet spot for FHA.”
Blomquist also said that first-time homebuyers have been purchasing more houses this year, helping FHA’s numbers.
“We definitely saw evidence in 2015 that first-time homebuyers are coming back,” Blomquist said. “It may not be as quickly as some people want, but they are coming back. Greater FHA pickup is one sign of that. I think it is a big sign of that.”
USDA loan numbers went the other way, however, declining for the second year in a row. USDA officials blamed the lower counts and volumes on economic factors that include weakening demand for refinances and fewer home sales in rural areas because of tight inventories.
USDA loan guarantees totaled 134, 254, which was down 4 percent compared with 2014 and 17.6 percent from 2013. Volumes fell to $18.6 billion, down 2.2 percent from 2014 and 16.7 percent from 2013.
“We believe the year-over-year decline reflected multiple factors,” Rural Housing Service Administrator Tony Hernandez said. “Most importantly, affordable housing inventory in rural communities is very low, which puts downward pressure on home sales. The supply of decent, affordable housing is constrained by the dearth of new construction and the continuing deterioration of existing housing stock.”