Second half 2007 mortgage originations show preference for fixed-rate over ARMsMortgagePress.comMBA, fixed rate loans, ARMs, Mortgage Originations Survey
The demand for fixed rate mortgage products increased in the
second half of 2007 according to the Mortgage Bankers Association's
(MBA) Mortgage Originations Survey. This demand was largely due to
a substantial decline in long term interest rates and the narrowed
spread between the adjustable rate mortgage (ARM) and fixed
mortgage rates. Tightened lending standards for subprime and
nontraditional loans, where ARM loans were historically more
popular, also reduced ARM originations.
In addition, as lending standards became more stringent, the
origination of mortgages with deferred amortization ("interest
only" or "IO") decreased.
Key findings from the survey (percentages are based on dollar
volume of originated loans, unless noted otherwise):
• For first mortgages, fixed-rate loans (excluding IOs)
accounted for 63.6 percent of loans in the second half of 2007
compared to 53.4 percent in the first half of 2007.
• In the second half of 2007, 79.0 percent of all
origination dollars were for prime loans compared to 70.0 percent
in the first half of 2007, 7.5 percent were non-prime (10.4 percent
in the first half of 2007), and 7.8 percent were Alt-A (15.8
percent in the first half of 2007).
• The government insured share of originations increased
(FHA and VA), as FHA loans replaced subprime and other
nontraditional loans. In the second half of 2007, 5.7 percent of
origination dollars were government insured loans, compared with
3.8 percent in the first half of 2007.
• First-time homebuyer purchases represented 30.2 percent
of the number of purchase loans in the second half of 2007, a
slight decrease from 32.6 percent in the first half of 2007. The
average loan amount for first time purchases increased to $215,185,
compared to an average loan amount of $202,265 in the first half of
Survey participation included mortgage bankers, commercial banks
and thrifts and many of the top HMDA originators. Information
collected in this survey includes detailed origination data on
various mortgage characteristics including loan type, product type,
amortization type, first-time homebuyers and property type.
For more information, visit www.mortgagebankers.org.