MBA: Fixed/Prime Origination Trend Growing

The second half of 2007 showed the mortgage originations market moving even more heavily toward a fixed-rate, prime-credit business, according to the latest Mortgage Bankers Association Mortgage Originations Survey. "Long-term rates declined substantially in the second half of 2007," the report said. "At the same time, the spread between the [adjustable-rate mortgage] and fixed mortgage rates narrowed. As a result, the demand for fixed-rate mortgage products increased." For first mortgages, fixed-rate loans (excluding interest-only loans) accounted for 63.6% of loans by dollar volume in the second half of 2007, compared with 53.4% in the first half of 2007, according to the MBA survey. By number of loans originated, 77.8% were fixed-rate loans. In the second half of 2007, 79.0% of all origination dollars went for prime loans, compared with 70.0% in the first half of 2007. Subprime production made up 7.5%, compared with 10.4% in the first half of 2007, while alternative-A loans constituted 7.8%, compared with 15.8% in the first half of 2007, the MBA said. The share of government loans produced rose from 3.8% in the first half of 2007 to 5.7% in the second half. Refinancings constituted 54.8% of production in the second half of 2007, virtually unchanged from the level recorded in the first half. The MBA can be found online at http://www.mortgagebankers.org.