Magazine article Mortgage Banking

Borrowers Shift to Fixed-Rate, Government Mortgages in First-Half 2008

Magazine article Mortgage Banking

Borrowers Shift to Fixed-Rate, Government Mortgages in First-Half 2008

Article excerpt

Borrowers who took out mortgages in the first half of 2008 showed a strong preference for fixed-rate mortgage products due to a decrease in FRM rates and the continued tightening of lending standards, according to MBA's Mortgage Originations Survey.

MBA's survey, released in November, noted that the government loan share of originations more than doubled to 11.8 percent in the first half of 2008 compared with 5.7 percent in the second half of 2007.

The government-loans category includes loans guaranteed or insured by the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA) and the Rural Housing Service. The increase in the FHA loan limit, which broadened access to FHA financing to more borrowers, was one of the factors behind the increased popularity of the FHA.

The refinance share of all originations was 6.17 percent in the first half of 2008, compared with 54.8 percent in the second half of 2007, while the percent of refinance originations for rate or term purposes increased from 38.1 percent in the second half of 2007 to 48.6 percent in the first half of 2008.

The refinance volume also increased 5.8 percent in the first half of 2008, based on data from repeater companies, which are participants that responded to the survey during both halves, said MBA.

Other key findings from the survey include:

* For first mortgages, fixed-rate loans, excluding interest-only loans (IOs), accounted for 78. …

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