The availability of mortgage credit rose 1.1% in February, driven by expanded refinance opportunities for lenders, the Mortgage Bankers Association (MBA) said in a monthly mortgage credit report released Tuesday.
The growth in credit availability was particularly concentrated in loan programs focused on cash-out refinances and investor homes, though these were mostly limited to borrowers with lower loan-to-value ratios, observed Joel Kan, deputy chief economist at the MBA, in analysis accompanying the index update.
But government lending, including Federal Housing Administration (FHA) loans, saw a notable downtick in mortgage credit extension last month.
“The government index was the only component that saw a decline in credit supply over the month, as lenders likely tightened underwriting standards given the recent increase in FHA mortgage delinquency rates,” Kan noted.
The MBA’s component index tracking conventional mortgage availability aligning with Fannie Mae and Freddie Mac underwriting guidelines saw outsized gains at 2.7% growth, while the government component index measuring access to loans insured by the FHA or Department of Veterans Affairs (VA) loans declined 0.8% over the month.
The jumbo mortgage component index expanded nearly 3% in February, continuing the prior month’s growth and signaling continued strength in the non-QM sector.
A pullback in FHA lending was also observed in Optimal Blue’s February rate-lock data, with the FHA share of total lock volumes more than 3% lower over the year at 17.1%, a monthly slide of 0.26% and three-month drop of 1.7%. First-time buyer purchase share among all FHA purchase locks was down just 1% over the year to land at 70%.
Amid a nationwide delinquency rate of 4.26% on all outstanding mortgages on one- to four-unit residential properties in the fourth quarter of 2025, FHA delinquencies increased to 11.52%, according to MBA reporting last month. That’s the highest level since the second quarter of 2021.
The most recent figures from Ginnie Mae, the government-run issuer of government mortgage-backed securities, indicate the serious delinquency rate on FHA loans has risen every month since a 2025 low of 3.06% to land at 4.93% at the end of January.
Ginnie Mae MBS issuance rose sharply last year to $526 billion, up nearly 32% over the past two years, from $423 billion in 2024 and $404 billion in 2023. Unpaid principal balance on its portfolio has increased about 14.6% over that period, from about $2.47 trillion in 2023 to $2.83 trillion in 2025.
Ten states accounted for slightly more than half of all single-family Ginnie Mae issuance at the end of September 2025, led by 10.7% market share in Texas, 8.3% share in Florida and 6.4% share in California. Georgia and Virginia rounded out the top five with 4.6% and 3.9% market share, respectively.
Deteriorating performance in FHA loans stems from a confluence of factors. Rising taxes and insurance costs have eroded the affordability of long-term homeownership, while the end of COVID-19 pandemic-era loss mitigation policies effectively ceased FHA foreclosures from flowing through the mortgage servicing system for multiple years.
As Daren Blomquist of Auction.com previously noted in a Scotsman Guide column, a growing number of homeowners who made use of those pandemic-era FHA programs “are now falling back into default and facing foreclosure with little or no equity left, making foreclosure harder to avoid, with a short sale often the only option.”
