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 fixed mortgage rates and the continued tightening of lending standards, according to the recent Mortgage Bankers Association's (MBA) Mortgage Originations Survey.
In addition, the government share of originations more than doubled to 11.8% in the first half of 2008, compared to 5.7% in the second half of 2007. This category includes loans guaranteed or insured by the Department of Veterans Affairs, the Federal Housing Administration (FHA) and Rural Housing Service. The increase in the FHA loan limit, which broadened FHA financing for more borrowers, was one of the factors that contributed to the increased popularity of the FHA, the MBA says.
The refinance share of all originations was 61.7% in the first half of 2008, compared to 54.8% in the second half of 2007. The MBA also found that originations of mortgages with deferred amortization (interest-only) continued to decrease significantly for both fixed-rate and adjustable-rate products from the second half of 2007.
Source: Mortgage Bankers Association