FHA now backs a quarter of all new loans

FHA loans as share of total loans

Jeff Baird is a real estate valuation consultant based in Chicago. He founded Lakeshore Analytics to bring comprehensive, understandable housing data and analysis to Chicago-area readers. The site features a blog with free market news and charts, summary data on 20 top neighborhoods, and quarterly data subscriptions.

FHA-insured loans are now a quarter of all mortgage loans issued in the U.S., according to new Census Bureau figures. Until as recently as the end of 2007, the FHA backed less than 5% of all new loans.

In just three years, the FHA has tripled the number of new loans it insures annually to about 90,000. At the same time, the total number of loans issued has gone down as fewer people buy homes and fewer people take cash-out refinances.

Anecdotally, it seems like most new condominium projects in Chicago have “FHA approved” in their marketing and have also partnered with a bank that issues FHA loans. (Consumers don’t get loans directly from the FHA: they go to a bank that offers an FHA product; the government in turn insures the loan on behalf of the bank.)

Homeowners associations go back and forth about whether they want to go through the trouble of FHA approval, but the calculus may change now that this is such a big part of the mortgage market.

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