The Mortgage Bankers Association first mortgage subprime originations volume dipped by 30% in the first half of 2006. This figure was disclosed in the MBA's Subprime Mortgage Originations Survey released today.

The survey had several key findings (note that percentages are based on dollar volume of originated loans). The first is that subprime first mortgage origination volume dropped 30% in terms of both dollars and loan count as compared to the second half of last year to the first half of this year. Also, subprime loans made up 19% of all originations in this year's first half.

The BMA also said that for the first half of 2006, 55% of subprime originations were for refinance purposes versus 60% in the second half of 2005. Among subprime refinances, 75% were for cashout purposes versus 88% for the second half of 2005.

According to the Association's survey, subprime loans for home purchases dropped 25% between the second half of 2005 and the first half of 2006, whereas prime loans for home purchases declined only 6 percent during that same period.

The MBA said that based on loan count, one in four subprime purchase loans was made toa first-time homebuyers. The Association also reported that the average loan amount for subprime loans in the first half of this year was $200,167, which is 7% more compared to the average loan amount for subprime loans of $186,790 in the second half of 2005.

ARM loans (inc. IO ARMs) comprised 67 percent of subprime originations in the first half of 2006, versus an ARM share of 74 percent of subprime originations in the second half of 2005.

In terms of subprime second mortgages, included in the findings was that subprime second mortgage originations dropped 14% in dollar value from the second half of last year to the first half of this year, although increased in number by 57%. Also, the MBA said that the average loan amount for second mortgages in this half was $33,555, dropping from $52,382 from the second half of last year. The notable drop in the average loan amount accompanied by the rise in the number of second mortgage originations was mostly because of a significant rise in low balance stand alone HELOCs.  

"In the context of a decelerating housing market and a slowing of overall mortgage originations activity, subprime mortgage originations slowed as well in the first half of 2006," said Douglas Duncan, MBA's chief economist and senior vice president of research and business development.  "Consumers respond to changing opportunities in the marketplace, but it looks like these products serve an important need.  In particular, one in four subprime purchase loans was made to a first-time homebuyer during this time period."

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