Percentage first-time homebuyers using sub-prime up in second half of 2006MortgagePress.comFirst-time homebuyers,sub-prime
The percentage of sub-prime loans being used by first-time
homebuyers increased from 12 percent to 15 percent in the second
half of 2006, according to the recently released Mortgage Bankers
Association's "Sub-Prime Mortgage Originations Survey." The
percentage of sub-prime loans used for repeat and first-time home
purchases increased from 46 percent to 47 percent. Key findings
from the survey include (percentages are based on dollar volume of
originated loans):
• For the second half of 2006, 55 percent of sub-prime
originations were for refinance purposes, unchanged from the first
half of 2006. Among sub-prime refinances, 87 percent were for
cash-out purposes, compared to 75 percent for the first half of
2006. However, in the first half of 2006, 12 percent of refinances
were reported as "unknown" or "other purposes" and thus, the
refinance for cash-out purposes in the first half of 2006 could
very well be higher.
• Based on loan count, 32 percent of sub-prime purchase loans
were made to first-time homebuyers, up from 25 percent in the first
half of 2006.
• The average loan amount for sub-prime loans in the second
half of 2006 was $202,295, only one percent higher than the average
loan amount for sub-prime loans of $200,167 in the first half of
2006.
• Nearly 72 percent of sub-prime originations came through
the broker channel in the second half of 2006, an increase of three
percent from the first half of 2006.
• Adjustable-rate mortgage loans (including interest-only
ARMs) comprised 75 percent of sub-prime originations in the second
half of 2006, versus an ARM share of 67 percent of sub-prime
originations in the first half of 2006.
• Owner-occupied homes represented 93 percent of sub-prime
originations in the second half of 2006, versus 92 percent in the
first half of 2006.
• The average loan amount for second mortgages during Q3 and
Q4 of 2006 was $35,506, an increase from $33,555 in the first half
of 2006. The increase in the average loan amount along with the
rise in the number of second mortgage originations was driven
largely by a sharp increase in closed-end loans.
For more information, visit www.mortgagebankers.org.
