Tuesday, October 24, 2006

National Housing Picture.....

Nontraditional’ mortgages rise as overall origination falls
A slowing housing market has put a damper on first-mortgage origination volume for the first half of the year, an industry survey released Monday shows.

First-mortgage origination volume decreased 16 percent in the first half of 2006, while strong demand continued for interest-only and payment-option mortgages, or so-called “nontraditional” mortgages, according to a survey from the Mortgage Bankers Association trade group.

Interest-only loans accounted for 26 percent of originations in the first half of 2006.

The trade group said that subprime loans made up 19 percent of all originations in the first half of the year.

The average loan amount for subprime loans during the survey period was $200,167, a 7 percent increase from the second half of 2005.

Fifty-five percent of subprime originations during the first half of 2006 were for refinance purposes. !!!!!!!!!
When the banks start getting stiffed by their borrowers remember this piece of info - 55% of subprime (risky) originations were refinancing!! These risky borrowers were probably locking in better fixed rates, but that doesn't mean they will be able to make the payments. Just another reason to stay really short the mortgage market.

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