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This thread is getting pretty skimpy in terms of data - here's a thread to talk about how our US government is crowding out otherwise private investment.
To kick off: mortgages
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Executive summary: From the last recession (1996), the FHA's share of numbers of mortgages originated has fluctuated from a 1996 share of 19% to a cycle low share of 3% in 2006. Since then the countercycle has seen FHA share rise to 35% in Q4 2008 (and growing?).
Besides the foreclosure issue (7% of FHA loans are seriously delinquent vs. 20% of subprime and a typical 2% of prime), the sheer numbers of FHA loans threatens crowding out of conventional lending with its resultant effects on regional banks.
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http://www.gao.gov/htext/d07645.html
FHA share in 1996: 19%
FHA share in 2005: 6%
Latest news:
http://www.fhfa.gov/webfiles/1659/WH...siumFinalr.pdf
From 1997-2003, Fannie Mae’s and Freddie Mac’s market share of mortgage originations gradually grew to almost 55 percent.
The market share of mortgages insured by FHA/VA (Federal Housing Administration/Veterans Administration) has risen much more dramatically, from 3 percent in 2006 to 20 percent for 2008, but even more startling, to 35 percent in the fourth quarter of 2008.
Why does this matter?
http://www.hud.gov/offices/cir/test090402.cfm
The good news: FHA loans aren't defaulting as badly as subprime.
The bad news: There may be 3 million FHA loans issued in 2009 alone.
http://www.portfolio.com/views/blogs...ring-fha-loans
http://www.fhaloanpros.com/
The crowding out? Money center and regional banks derived substantial amounts of their income in the past 10 years from home loans - both fees and securitization. While securitization is still down (and being counted) and fees may or may not be lost or reduced by this process, certainly private investment in the form of capital for home loans is now crowded out.
The US government assuming an ever increasing share of the home loan market via the FHA and VA programs bodes poorly for long term performance in the housing market.
To kick off: mortgages
-------------------------------
Executive summary: From the last recession (1996), the FHA's share of numbers of mortgages originated has fluctuated from a 1996 share of 19% to a cycle low share of 3% in 2006. Since then the countercycle has seen FHA share rise to 35% in Q4 2008 (and growing?).
Besides the foreclosure issue (7% of FHA loans are seriously delinquent vs. 20% of subprime and a typical 2% of prime), the sheer numbers of FHA loans threatens crowding out of conventional lending with its resultant effects on regional banks.
-------------------------------
http://www.gao.gov/htext/d07645.html
FHA share in 1996: 19%
FHA share in 2005: 6%
FHA's share of the market for home purchase mortgages declined
substantially from 1996 through 2005, most significantly among minority
borrowers who accounted for a growing share of subprime loans in that
period. More specifically, FHA's market share in terms of numbers of
loans fell from 19 percent in 1996 to 6 percent in 2005, with almost
all of the decline occurring since 2001. In contrast,
* the market share for prime loans was relatively stable over the 10-
year period, growing from 73 to 76 percent;
* the market share for subprime loans grew nearly every year, rising
from 2 percent to 15 percent overall, with particularly large increases
since 2001; and:
* the market share of the housing GSEs--essentially a subset of the
prime market--rose 3 percentage points overall (to roughly 30 percent
in 2005), with nearly all of the growth occurring before 2002.
substantially from 1996 through 2005, most significantly among minority
borrowers who accounted for a growing share of subprime loans in that
period. More specifically, FHA's market share in terms of numbers of
loans fell from 19 percent in 1996 to 6 percent in 2005, with almost
all of the decline occurring since 2001. In contrast,
* the market share for prime loans was relatively stable over the 10-
year period, growing from 73 to 76 percent;
* the market share for subprime loans grew nearly every year, rising
from 2 percent to 15 percent overall, with particularly large increases
since 2001; and:
* the market share of the housing GSEs--essentially a subset of the
prime market--rose 3 percentage points overall (to roughly 30 percent
in 2005), with nearly all of the growth occurring before 2002.
http://www.fhfa.gov/webfiles/1659/WH...siumFinalr.pdf
From 1997-2003, Fannie Mae’s and Freddie Mac’s market share of mortgage originations gradually grew to almost 55 percent.
The market share of mortgages insured by FHA/VA (Federal Housing Administration/Veterans Administration) has risen much more dramatically, from 3 percent in 2006 to 20 percent for 2008, but even more startling, to 35 percent in the fourth quarter of 2008.
http://www.hud.gov/offices/cir/test090402.cfm
FHA loans continue to substantially outperform subprime loans: only 7 percent of FHA loans are seriously delinquent (greater than 90 days delinquent or in foreclosure) compared to more than 23 percent of subprime loans.
The bad news: There may be 3 million FHA loans issued in 2009 alone.
http://www.portfolio.com/views/blogs...ring-fha-loans
There were roughly 500,000 FHA loans originated in 2007 compared to 1.4 million in 2008.
As of the end of March, the FHA had:
___ 1,405,620 mortgage applications — that’s 84.4 percent higher than the 762,266 loan applications made during the first six months of fiscal 2008.
___ 867,716 approved loans — that’s more than double the 2008 total of 406,833 to this point, an increase of 113.3 percent.
___ 1,405,620 mortgage applications — that’s 84.4 percent higher than the 762,266 loan applications made during the first six months of fiscal 2008.
___ 867,716 approved loans — that’s more than double the 2008 total of 406,833 to this point, an increase of 113.3 percent.
The US government assuming an ever increasing share of the home loan market via the FHA and VA programs bodes poorly for long term performance in the housing market.