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Moving via purchase mortgages on the rise

October 8, 2010 - A new report says that a number of families may have kickstarted their moving plans in an attempt to buy a new home before new federal regulations set in.

The Mortgage Bankers Association reported that the number of homebuyers who sought mortgage applications for the purchase of a new home increased 9.3 percent for the week ending October 1. The trade group's seasonally adjusted Purchase Index is now at the highest level its been since May. Jay Brinkmann, the MBA's chief economist, tied the rise in purchase applications directly to new regulations on mortgages insured through the Federal Housing Administration, which apply to loans made after October 4.

"The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent," said Brinkmann. "One possible driver of last week's big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect October 4th, which included somewhat higher credit score and down payment requirements."

Additionally, those new FHA mortgage regulations require borrowers to pay a larger annual fee for mortgage insurance - 0.9 percent compared to 0.55 percent before. On the other hand, their initial up-front fee has decreased from 2.25 percent to 1 percent.
 

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