Jumbo and FHA progress continued to lag behind GSE loans over the previous 12 months

TransUnion's latest quarterly report shows that the gap between the growth rate of government-sponsored corporate mortgages and other types of credit has widened over the past year.

The change in the number of loans purchased by Fannie Mae and Freddie Mac was close to last year's level at 110%, while Federal Housing Administration insured mortgages increased 22% and Jumbo products increased 28%, according to first-quarter data in The latest report from TransUnion. Comparable year-over-year growth rates were 114% for GSE loans in the first quarter of last year; Jumbo, 50% and FHA, 42%.

Refinancing, high home prices, the concentration of pandemic hardship on government-insured loans, and borrowers' tendency to refinance into lower-cost GSE products may have played a role in the increased discrepancy in FHA products.

"With the appreciation of home prices, single-family homes are also out of reach for several first-time buyers who are also prone to abandoning FHA loans," said Matt Komos, vice president of research and advice at TransUnion, in an email. The refinancing proportions in the first quarter were 64% for Fannie and Freddie loans, compared with 43% for FHA loans, he noted.

Meanwhile, the ongoing impact of the market disruption affecting the jumbo market last year is likely to curb its growth until at least the first quarter of 2021.

“Several major jumbo lenders … paused their … programs when the pandemic headwinds began to be felt. Jumbo loans have improved, but nowhere near pre-pandemic levels, "Komos said.

While TransUnion's report showed some differences in growth rates, it generally showed that the larger consumer credit market as a whole has largely recovered from a decline in lending during the pandemic.

TransUnion's Credit Industry Indicator rose to a high of 128 in the second quarter, compared to 87 in the same period last year. (Mortgage lending figures were reported with a quarter delay in TransUnion's report.)

While government intervention helped mortgages recover from market disruptions fairly quickly at the start of the pandemic, sectors like credit cards and auto loans saw a slower recovery, the TransUnion study showed.

Related Articles