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Third of US mortgages insured by govt

A third of American mortgage applications are currently for loans that are guaranteed by the US government.

The government-insured share of mortgage applications was 35.9 per cent in June 2009, the highest level since November 1990, according to the Mortgage Bankers Association.

The government-insured share of purchase applications in June was 38.6 percent, up from 27.8 percent one year ago.

MBA associate vice president of economic forecasting Orawin Velz says: “A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans.

“In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”

In the UK many industry figures have called for a return of a Government-backed mortgage guarantee, similar to the Mortgage Indemnity Guarantees of the eighties and early nineties.

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