Fixed-rate mortgages became more popular in the second half of 2006 as short-term rates increased, the Mortgage Bankers Association reported Tuesday.
According to the group's Mortgage Originations Survey, fixed-rate loans made up 46.2% of dollar volume for first mortgages in the second half of the year. In the first half, fixed-rate loans made up 43.3% of those loan dollars.
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In terms of the number of loans that originated during the time period, 60.5% were fixed-rate in the second half of the year, up from 54% in the first.
Total mortgage origination volume increased in the second half of the year, up 11% in dollar amount compared with the first half and up 19.4% based on loan count, according to the group. The MBA said that the increase in originations was due to a rise in home-purchase volume and an increase in refinance volume.
Interest-only loans accounted for 28.5% of originations in the second half of the year; they made up 25.6% in the first half, according to the survey.
And of all home purchases, 26.9% were made by first-time buyers, unchanged from the first half of the year. The average loan amount for these buyers was $197,044; the average loan amount for those who had bought before was $228,547.
Subprime mortgages Despite an overall shift to fixed rates, adjustable-rate mortgages made up a bigger percentage of all subprime originations in the second half of 2006, according to a separate MBA survey. ARMs comprised 75% of subprime originations in the second half of the year, compared with 67% in the first half, according to the Subprime Mortgage Originations Survey.
In addition, the group reported that the percentage of subprime loans being used by first-time home buyers was 15%, up from 12% in the first half of the year. Fifty-five percent of subprime originations were for refinances, unchanged from the first half of the year.
The average loan amount for a subprime loan in the second half of 2006 was $202,295, up from the first half of 2006, when the average loan amount was $200,167, the MBA said.
Regarding second mortgages, the average subprime loan amount was $35,506, up from $33,555 in the first half of 2006. The increase in the average loan amount was driven by a sharp increase in closed-end loans, the group reported.
According to MBA research, origination volume of all second mortgages -- both prime and subprime -- decreased 5.8%. Closed-end second mortgages, which usually have a fixed rate for a set term, increased 6.3% and home-equity lines of credit, many of which are tied to the prime rate, decreased 11.6%.
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