| Title: | Second Half 2007 Mortgage Originations Show Preference for Fixed Rate Products Over Adjustable Rate Products |
| Source: | MBA |
| Date: | 7/29/2008 |
WASHINGTON, D.C. (July 29, 2008) –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 released today. 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):
o 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.
o 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).
o 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.
o 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 2007.
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.
If you are a member of the media and would like a copy of the survey, please contact Jason Vasquez at (202) 557-2950 or jvasquez@mortgagebankers.org. If you are not a member of the media and would like to purchase the survey, please call (800) 348-8653.
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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mortgagebankers.org.