Fixed rate mortgages are growing increasingly popular "due to a decrease in rates and the continued tightening in lending standards," according to the Mortgage Bankers Association's (MBA) Mortgage Origination Survey. For first mortgages, fixed rate loans--including interest-only--accounted for 78.5% of the dollar value of originations, as opposed to 63.6% during the first half of 2007.
The bi-annul survey, released Nov. 5, also showed that refinances are up to 61.7% of all originations from 54.8% last year. The percentage of mortgages obtained by first-time home buyers was also up slightly, with a 2% gain from the second half of last year. The share of government-backed loan originations doubled from 5.7% in the first half of 2007 to 11.8% in the first half of this year.
Government loans included loans guaranteed or insured by the Department of Veterans Affairs, the Federal Housing Administration (FHA), and Rural Housing Service. MBA said this increase comes from borrowers choosing FHA loans as an alternative to subprime and non-traditional loans, as well as the improved ability of borrowers with larger loan balances to qualify for the FHAs.
Other survey highlights: Interest-only loans have dropped from 22.4% in the second half of 2007 to 10.6% in the second half of 2008; average loan amounts for purchase and refinance loans were $230,409 and $222,487, respectively; and 82.7% of all originations in first half of 2008 were prime loans, compared to 79% in 2007, 3.8% were non-prime, and 1.7% were Alt-A loans.
Information for the survey was collected during the first half of 2008. The survey concentrated on first-lien and second-lien originations for single-family properties.