Conforming Share of Mortgage Market Hits 94% in Early 2009

Originations of conforming mortgages–those eligible for purchase or securitization by governmental entities–continued to grow at a brisk pace in the first quarter of 2009. In fact, the conforming share of total originations in the first three months of this year hit a record high of 94 percent, according to new numbers scheduled to be released this week by Inside Mortgage Finance. A year ago the conforming share of total originations stood at 84 percent.

The mortgage market’s ongoing dependence on FHA and Fannie Mae and Freddie Mac, combined with a big jump in refinance activity, were the primary drivers of the growth in the conforming mortgage sector. Meanwhile, jumbo mortgage activity in the nonconforming sector remained at an historically low level in the first quarter of 2009. The jumbo share of new first lien mortgage originations was 5 percent in the first quarter or about the same level found in the fourth quarter. As recently as 2007, the jumbo share of total originations was 17 percent.

Conforming Jumbo Activity Surges in FHA Program

Although lending in so-called conforming jumbo mortgages - those between $418,000 and $729,750 - has gotten off to a slow start since Congress authorized Fannie Mae, Freddie Mac and FHA to start doing business in the higher balance loans, things may be changing.

Data compiled by Inside Mortgage Finance reveal that a sizeable $1.24 billion in newly minted FHA conforming jumbo loans are slated for Ginnie Mae securities during the month of July. This is way up from the $592 million in conforming jumbo loans that have shown up from Fannie, Freddie or Ginnie Mae since April. You can get an inside look at the emerging market for conforming jumbo mortgage loans at an upcoming audio conference offered by Inside Mortgage Finance. Click here for more info.

Conforming Jumbo Product Finally Starts to Look Good to Borrowers

Recent changes announced by Fannie Mae and Freddie Mac to improve the secondary market pricing of so-called conforming jumbo mortgages – those loans between $417,000 and $729,750 – seem to be paying off.

According to Inside Mortgage Finance’s weekly survey, the premium initially associated with conforming jumbo loans has effectively vanished and borrowers can now get higher balance Fannie/Freddie mortgages at the same interest rate as lower balance mortgages. But that attractive pricing has not yet translated into many conforming jumbo mortgages being made.

Even though Fannie, Freddie and FHA were authorized to start doing business in conforming jumbo loans back in March, less than $600 million had been securitized as of the end of May. And more than half of the early volume has come from FHA.

Jumbo Share of Originations Slipped to 8% in Early 2008

The absence of a liquid secondary market for non-governmental mortgages is taking a big toll on the jumbo sector this year. According to numbers compiled by Inside Mortgage Finance, the jumbo share of total mortgage originations sank to just 8 percent in the first quarter of 2008. That was way down from the 15 percent jumbo share found a year ago.

Other sectors of the residential mortgage market that took big hits in the first three months of 2008 included: subprime, down to 2 percent from 14 percent a year ago; and Alt A, where the market share tumbled from 14 percent to 4 percent

Lawmakers Quibble on Where to Set Conforming Loan Limit

Lawmakers on the Senate Banking Committee this week broke ranks with their House counterparts by advancing a comprehensive housing bill that would permanently set the conforming loan limit at $550,000. This is markedly lower than the $729,750 ceiling approved by the full House last week.

The Senate appears to be taking a much tougher approach than the House when it comes to allowing Fannie Mae and Freddie Mac to move into what has previously been the jumbo mortgage market. Aside from the difference in the maximum loan limit, the new Senate measure specifically prohibits Fannie and Freddie from holding any so-called conforming jumbo mortgages in their portfolios.

Agency Share of MBS Market Climbs to Record 94% in 1Q08

If there was any question that the U.S. residential mortgage market has effectively become a government-agency market in the current credit-starved lending environment, first quarter numbers should put any uncertainty to rest.

According to new data compiled by Inside Mortgage Finance, the agency share of new mortgages that were securitized in the first three months of 2008 soared to a record-busting 94 percent. Fannie Mae and Freddie Mac together accounted for a record-high 83 percent of new securitized mortgage volume, while Ginnie Mae activity represented an additional 11 percent. Meanwhile, non-agency mortgage security activity – namely those involving subprime, Alt A and jumbo mortgages – sunk to just 6 percent in the first quarter. That was the lowest market share for the non-agency sector seen in 17 years.