Retail lenders like banks and direct Internet operations picked up a larger share of subprime loan originations in the first half of 2007, according to a survey of subprime lenders by the Mortgage Bankers Association.

Retail lenders grew their market share of subprime first loans from 23 percent in the last half of 2006 to 36 percent in the first six months of 2007, the survey found.

While mortgage brokers still accounted for the majority of subprime loan originations — 58 percent, measured by dollar volume — that’s down from 72 percent in the second half of 2006.

Some of that shrinking market share appears to have been lost to direct Internet lenders, who originated 6 percent of subprime loans in the first half of 2007 — up 50 percent from the latter half of 2006, when 4 percent of subprime loans were originated over the Internet.

The average loan amount originated over the Internet ($135,640) was smaller than those originated by mortgage brokers ($195,200) or retail lenders like banks ($180,732).

When measuring the number of loans made, rather than dollar volume, the survey found direct Internet originations accounted for 8 percent of subprime loans in the first half of 2007, up from 5 percent the previous six months.

Some other trends from first half of 2007 included:

  • A growing percentage of subprime loans in the first half of 2007 (64 percent) were refinance, rather than purchase loans. That compares with a 55 percent market share for refinance loans in latter half of 2006.

  • The average subprime loan amount shrank 8.4 percent, from $202,295 in the latter half of 2006 to $185,109 in first half of 2007. The difference for the average second loans was even more pronounced — $15,809, compared with $35,506.

  • Some 75 percent of subprime loans were adjustable-rate mortgages (ARMs) in the second half of 2006, compared with 69 percent in the following six months.

The MBA issued a press release summarizing some of the survey’s findings.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription