The popularity of FHA mortgages is slowing down, while the use of mortgage financing is growing overall, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

“Conventional mortgages are making a comeback while FHA mortgages are not,” said Thomas Popik, research director for Campbell Surveys. “Reasons for the growth in conventional mortgages include low rates, increased underwriting of high LTV mortgages by private mortgage insurers, and a price structure including insurance premiums that is cheaper than the FHA alternative.”

FHA-backed transactions made a slight increase in August to 25.9 percent from 25.5 percent in July.

The percentage is down from January, when FHA transactions accounted for 27.3 percent of all home purchase transactions.

Overall, mortgages were used to finance 68.9 percent of home purchase transactions in August, an increase from 67.5 percent in July.

According to a HousingPulse release, the trend toward mortgage financing rather than cash transactions is due to a surge in purchases of non-distressed properties.

The HousingPulse Distressed Property Index (DPI) showed the share of home purchases for distressed properties decreased to 40.4 percent in August, a drop from 42.2 percent in July. The figure for August is also the lowest level recorded since January of 2010.

When investors do buy distressed homes, a large majority of investors (77 percent) in August said they relied on cash.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey includes about 2,500 real estate agents across the U.S.

According to feedback from agents, mortgage availability has improved over the summer months.
“Mortgages for home buyers with less than 20% down were available more than in previous months,” said one agent from California. A Texas agent said, “Contrary to media reports, there is no shortage of mortgage money available for buyers with down payments less than 20%.”