Overall, mortgage applications dropped by about 1% last month. But that’s not a bad thing for markets and not surprising; historically, mortgage applications vary from season to season, and when you account for seasonal variables, mortgage applications actually rose .2% the week ending August 21, 2015.
So what accounts for the rise in mortgage applications? According to World Property Journal, the answer is simple: government backed mortgages.
FHA Loan Applications on the Rise
The Fair Housing Administration (FHA) was established to help lower income families purchase a home they could not otherwise afford. An FHA mortgage is an insurance backed home loan that is provided by a FHA-approved lender.
In August, the FHA purchase index rose by a seasonally adjusted 5.6%, far outpacing overall mortgage applications for the month.
VA Mortgage Applications Soaring as Well
Similarly, a VA mortgage is available to qualified veterans, and guaranteed by the Veteran’s Administration.
In August, numerous veterans took advantage of this program in hopes of purchasing a home. Accounting for seasonal adjustments, the VA purchase index rose by 5.2%, far outpacing applications overall.
What Does This Mean for Real Estate Markets?
Even as it remains difficult for people with lower credit scores to get a mortgage, applicants are taking advantage of government mortgage programs to buy a home.
Government backed mortgages traditionally help boost mortgage application rates by broadening the field of people who qualify for a home loan, which certainly was the case in August.
Why Should You Care?
If you are a real estate professional, it’s important to understand changes in the real estate market, and how people are accomplishing their goal of homeownership. And as a borrower, it’s important to know how people are qualifying for a mortgage, and that real estate markets are healthy and improving.
Knowing that government backed mortgage programs are a primary driving force in the current housing market is important information for real estate professionals and borrowers alike.
The Marimark Mortgage Newsletter will keep you informed with important events in the mortgage industry that could impact your finances.
We especially focus on ways to save money on your current and future mortgages. And, we continually share the information we share with our clients, because we believe informed consumers are the best consumers.
Real estate agents, and other professionals in the industry, will receive an ongoing wealth of information that will help them serve their clients.
