First Mortgage Originations Rise; Fixed Rate Home Loans Lead the Way

According to a report released by the Mortgage Bankers Association this week, first-mortgage originations went up 14 percent in the second half of 2005. With short-term Florida home loan rates rising, home owners moved to fixed-rate mortgage products across the board.

According to the MBA’s Year-end 2005 Mortgage Originations Survey, fixed-rate products accounted for 47 percent of loan originations in the second half of last year, up from 42 percent in the first half.

“As short-term rates increased over the second half of 2005, homeowners moved away from adjustable rate loans into fixed-rate loans,” said Doug Duncan, MBA’s chief economist and senior vice president of research and business development.

More survey results; Reverse Florida home loans rise

The survey showed a 45 percent increase in reverse mortgage originations over their level in the first half, with originations of FHA’s Home Equity Conversion Mortgages rising by 48 percent and other reverse mortgage volume increasing by 27 percent.

During the second half of 2005, 72 percent of refinance loans contained a cash-out component. Fixed-rate products (including fixed-rate, interest-only Florida home loans) were 47 percent of loan originations in the second half of the year up from 42 percent in the first half.

The pattern doesn’t appear to be changing any time soon. As Florida home loan rates rise, the need to refinance to a more stable mortgage will continue.