Even though the latest pending sales data from July shows that sales are on the increase, there might be some evidence that they could be slowing soon. According to the Mortgage Bankers Association, week-to-week mortgage loan applications fell by 2.2%. This trend comes in spite of the fact that mortgage interest rates are still near historic lows.

Government insured mortgages rise

Even though mortgage loan applications were down overall, some specific types of mortgages saw an increase. Government insured mortgages, such as FHA loans, actually saw an increase. Most buyers are turning to mortgages insured by the government, since they come with lower down payment requirements than many mortgage lenders want right now.

Government insured mortgages are considered less risky for mortgage lenders, since the government covers them in the case of default. There are, of course, requirements to a government insured mortgage. Reasonably good credit is needed, and a down payment of around 3.5% is required. In recent years government backed mortgages had fallen out of favor as buyers looked for 0% down mortgage loans and other “creative” methods. Now, though, with the subprime crash fresh in many minds, government insured mortgages are looking attractive.