Mortgage volume higher in second half of 2005

Dollar volume of first-mortgage originations increased 14 percent from the first half of 2005 to the second half of the year, according to the Mortgage Originations Survey released May 9.

The results reflect an increased demand for fixed-rate loans in response to recent increases in Federal Reserve short-term interest rates ,while long-term rates remain low.

“Fixed-rate loans are more attractive as short-term interest rates rise to similar levels as long-term rates,” said Doug Duncan, MBA’s chief economist and senior vice president of research and business development, in a news release. “Not surprisingly, consumers respond to interest rate-driven changes in opportunities in the marketplace.”

Fixed-rate products totaled 47 percent of loan originations in the second half of the year, up from 42 percent in the first half.

Other findings in the survey:

• Refinancing accounted for 51 percent of loan originations in the second half;

• Fixed-rate interest-only loans accounted for 13 percent of origination volume in the second half, up from 7 percent in the first half of 2005;

• Total second mortgage originations increased by 13 percent form the first half of 2005 to the second half; and

• Closed-end second mortgages, which tend to be fixed-rate loans, increased 33 percent, while home equity lines of credit declined by 5 percent.

The survey included 114 participants who originated $866 billion in first mortgages and $189 billion in second mortgages in 2005.

Mortgage numbers down in May

In a separate MBA release, the Weekly Mortgage Applications Survey for the week ending May 5 shows that mortgage loan application numbers were down for the week.

The Market Composite Index, a measure of mortgage loan application volume, was 562.1, down 5.8 percent on a seasonally adjusted basis from a week earlier.

The Purchase Index decreased 3.9 percent to 416.5, and the Refinance Index was also down, dropping 8.8 percent to 1427.4.

The refinance share of mortgage activity for the week dropped to 33.8 percent, the lowest share since June 25, 2004. The adjustable-rate mortgage share of activity increased to 28.5 percent of total applications, up from 28.3 percent the previous week.

Average interest rates for 30-year fixed-rate mortgages increased to 6.61 percent from 6.57 percent; 15-year rates increased from 6.19 percent to 6.2 percent; and rates for one-year ARMs dropped from 6.08 percent to 6.04 percent.