Mortgage lenders, take notice: Federal housing loans are going upmarket.Â
Today’s average Federal Housing Authority borrowing rate is 50 basis points lower than the rate for conforming mortgages – in 2018, FHA rates were 13 bp higher than conforming rates (see chart). That 63-bp swing is largely the result of more borrowers with relatively higher credit scores opting for an FHA program as home affordability concerns continue to mount. Â
Overall, the number of borrowers choosing FHA is up 40% since 2018, and FHA loans now account for 17% of all mortgage lending.Â
This trend signals a growing opportunity for lenders to expand their offerings within the government market as a means of reaching more potential borrowers. Â
Rates And Volume Mix Of FHA Vs. Conforming Loans​
As FHA rates have continued to decrease versus conforming, its volume has surged.​
