Application volume for Federal Housing Administration mortgages slowed in May, as did insurance-in-force growth, but the latter is still outpacing private mortgage insurance, an analysis of data by Keefe, Bruyette & Woods found.

Furthermore, mortgage delinquency trends for FHA, which increased meaningfully following a change in loan modification rules in October, look to be stabilizing, said Bose George, in a report.

The total number of applications submitted for FHA loans was 107,433, compared with 120,700 in April and 106,441 for May 2025. For purchases only, May's total of 71,172 was lower compared with the prior month's 76,625 and from 78,001 for the previous year.

Conventional-to-FHA refinance volume at 16,067 was still elevated but down from the two prior months. In April, this form of refinance received 17,971 applications (the most since October 2024) and 17,787 in March.

During May 2025, 14,161 conventional-to-FHA applications were received. Other forms of refinancings, non-streamlined as well as streamlined, were also lower month-to-month, but elevated year-over-year.

Optimal Blue rate lock data for May found FHA had a 19% share of total activity. This compared with 48.9% for conforming mortgages, 18.7% for non-conforming, 12.6% for Veterans Affairs and 0.8% for U.S. Department of Agriculture.

June's data showed a slight decline in FHA share to 18.7% and conforming rate lock volume to 48.6%.

But nonconforming rate lock share increased to 19.3%.

May's insurance-in-force grew 8.3% at the FHA versus the prior year. However, the pace "ticked down modestly" from the first quarter's 8.8%, George said. April's growth rate was 8.4%, he added.

But the FHA IIF increase pace remains well above the private mortgage insurer annual run rate growth in the first quarter of 2%. The six active private MIs had a total of $1.614 trillion of IIF in the first quarter, George had noted in a note on Essent's earnings for the period.

This compared with $1.616 trillion in the fourth quarter and $1.579 trillion in the first quarter of 2025.

Meanwhile, FHA heavy servicers like PennyMac Financial Services should benefit from the stabilizing delinquency rate for the program, he wrote.

Expectations industry participants expressed during the Mortgage Bankers Association Secondary and Capital Markets Conference in May, were for a slow steady climb in delinquency rates although inflation and other external factors also were cited as contributors.

In the first quarter, foreclosures increased 28% for FHA loans, according to Attom Data Solutions.

George sees signs of a shift.

"FHA delinquencies, which increased meaningfully after changes to the FHA modification rules in October, appear to be stabilizing," George said. "While the seriously delinquent bucket remained flat month-to-month and was still up meaningfully year-over-year, both the 30-day and the 60-day buckets fell year-over-year (although they were up month-to-month)."