FHA Lending: Brokers Defy Market Odds, TPO Channel Surges in 2024
The FHA loan market has seen some interesting developments in 2024, as revealed by recent data from our FHA Pivot app. Despite challenging market conditions, the FHA market is showing remarkable resilience and even growth, defying broader market trends.
Looking at the month-over-month annual comparison for the entire FHA market, we see some encouraging signs for 2024. The year started strong, with January 2024 registering 59,187 FHA loans compared to 49,883 in January 2023 - an increase of roughly 28%. This positive trend continued into July, with 73,170 loans in 2024 versus 69,337 loans in 2023 - a 9.5% year-over-year increase. The overall trajectory for the first half of 2024 is positive compared to the previous year.
TPO Channel Gains Ground
Perhaps the most intriguing development in the 2024 FHA lending landscape is the performance of the wholesale (TPO) channel. The bar chart below breaks down FHA loans by channel from 2010 to 2024, and reveals a noteworthy trend in recent years.
In 2024 YTD, the wholesale (TPO) channel accounted for 24.73% of all FHA loans, up from its 22.74% share in 2023. This growth is notable when viewed in the context of the past decade. The wholesale channel's market share had been on a general decline since 2010, when it stood at 26.43%. The 2024YTD figure represents the highest market share for wholesale since 2011, signaling a potential resurgence in this sector.
Conversely, the retail channel has seen a decrease in market share, dropping from 77.26% in 2023 to 75.27% in 2024. While retail still dominates the FHA lending landscape, this shift shows that brokers are capturing a larger piece of the FHA lending pie.
Variations in Mortgage Interest Rates
The figure below provides a heat map with the average interest rates for FHA Purchase Fixed Rate loans across different states in 2024 (the darker colors indicate higher interest rates). Below the map we show a table comparing the Retail and Wholesale (TPO) channels by number of FHA purchase fixed rate loans and average/median interest rates.
Midwestern states show somewhat higher rates compared to other areas.
The national average interest rate for retail FHA purchase loans stands at 6.48%, with a median of 6.63%. Wholesale loans show a slightly higher average at 6.51%, with a median of 6.50%.
The wholesale channel's higher average but lower median interest rate compared to retail reveals an intriguing pattern in FHA lending. While wholesale lenders offer more loans at lower rates (reflected in the lower median), they also have some higher-rate outliers that pull up the average. In contrast, the retail channel shows more consistent pricing, but potentially at higher rates for many borrowers.
This statistical quirk underscores the importance of looking beyond averages when analyzing lending data, a best practice which we make easy in FHA Pivot.
Top FHA Brokerage Firms
There are over 1,000 brokerage firms providing borrowers with access to FHA finance. The table below ranks the top 10 by number of FHA loans nationally, with the second column showing their loan volume.
These brokerage firms offer FHA loans along with a variety of other mortgage products, including VA loans, conventional loans, jumbo loans, and more.
Nexa Mortgage LLC is the leading brokerage firm for FHA loans 2024 YTD, followed up by MTH Mortgage LLC, a Meritage Homes JV with loanDepot.
Mortgage lending, especially FHA lending, is a local story, and the top 10 brokerage firms for FHA loans vary state, county, and zip code.
FHA Outlook
The FHA lending market in 2024 is displaying significant dynamism, with the wholesale channel experiencing a notable resurgence. As brokers navigate the evolving lending landscape, it remains to be seen whether this trend will continue through the rest of the year.
Learn more about FHA Pivot and how you can use it to stay on top of the evolving FHA lending market.
