In June 2008, FHA mortgages posted two new records of the decade. The average mortgage amount of $172,933 for FHA mortgages in June was the highest average mortgage amount ever. The total dollar amount, $21.1 billion, was the highest monthly FHA mortgage total amount since we started tracking the the data in year 2000. June 2008 had the fifth highest number of FHA mortgage originations since year 2000.
The Economic Stimulus Act of 2008 (Public Law 110-185) included an increase to the maximum mortgage amount for FHA mortgages. That act temporarily allowed the maximum FHA mortgage to be as high as $729,750 for this year. The housing relief legislation signed this week makes permanent maximum FHA mortgage amounts as high as $625,500 in high cost areas. Over the next few months we expect to see the average mortgage size of FHA mortgages continue recording new highs.
Click on the chart for a larger image
The chart shows the monthly number of FHA mortgage originations since January 2000. June 2008 was the highest since October 2003.
The total monthly volume increases of FHA mortgages is partly related to an increase in the maximum FHA mortgage amounts. The new mortgage amount ceilings make FHA mortgages useful given price levels of homes. Conventional mortgages were available for prime borrowers having substantial down payments or lower down payments with private mortgage insurance. Since the latter half of 2007, FHA mortgages were the only option available for residential finance for many borrowers who could not qualify for conventional financing.
True! I stole the headline from Cramer.
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