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Borrowers shift to fixed-rate, government mortgages in first-half 2008.

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 78.5 percent of the dollar volume of originated loans in the first half of 2008, compared with 63.6 percent in the second half of 2007.

* In the first half of 2008, 82.7 percent of all organization dollars were for prime loans, compared with 79 percent in the second half of 2007; 3.8 percent were non-prime, compared with 7.5 percent in the second half of 2007; and 1.7 percent were alternative-A, compared with 7.8 percent in the second half of 2007.

* Originations of IO mortgages or mortgages with deferred amortization continued to decrease significantly for both fixed- and adjustable-rate products from the second half of 2007. IOs accounted for 10.6 percent of originations in the first half of 2008, compared with 22.4 percent in the second half of 2007.

* In the first half of 2008, first-time homebuyer purchases represented 29.9 percent of the dollar volume of purchase originations, compared with 27.9 percent in the second half of 2007. They represented 32.2 percent of the number of purchase loans in the first half of 2008, compared with 30.2 percent in the second half of 2007.

"Estimates from MBA's Mortgage Finance Forecast further demonstrate the trends in originations, as purchase originations were down by 16.2 percent in the first half of 2008 compared with the second half of 2007," stated the MBA survey. "Refinance originations were up 16.3 percent in the first half of 2008 compared with the second half of 2007."
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Title Annotation:Briefing Book
Comment:Borrowers shift to fixed-rate, government mortgages in first-half 2008.(Briefing Book)
Publication:Mortgage Banking
Article Type:Statistical data
Geographic Code:1USA
Date:Dec 1, 2008
Words:493
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