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.

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