As published in Scotsman Guide's Residential Edition, February 2009.
January's Origination Tracker, featuring October 2008 data, hinted at a ray of hope for mortgage brokers. This was dashed by the results of November's survey.
MONTHLY VOLUME DATA ___________________________
To view Wholesale Access' Origination Tracker data in chart form, click here (PowerPoint file).
The expected increase in loan originations because of lower interest rates on fixed-rate, conforming loans did not occur as soon as we expected. The average monthly broker volume dropped to its lowest level after increasing in September and October. Our sources have told us that December's showing will be better because of the lower rates, but only about 50 percent of these brokers' loan applications are approved.
Credit standards have improved. But loans originated during the first half of 2008 are showing increases in delinquency rates.
On the product side, fixed-rate loans comprise almost 97 percent of the market. Thus, we truly have only two products, fixed rate prime and Federal Housing Administration (FHA) loans. Prime loans comprised 47 percent of all originations, and government loans made up 42 percent. The remaining 11 percent primarily were jumbo loans (5 percent) and A-minus loans (also 5 percent).
ARM loans again declined, reaching their lowest level for the third-straight month. They now make up only 3 percent of the market.
November also saw a decline in the percent of loans with a combined loan to value of less than 80 percent. This group of loans had increased in October but returned to its pattern of decline, which started in August. This may be a positive sign for the economy and former occupants of the subprime (aka, nonprime) sector because most of the loans are getting FHA guarantees. We are concerned, however, that the government and FHA are taking on more risk than they know how to handle.
This information is compiled monthly by independent research firm Wholesale Access and its partners from a survey of more than 500 mortgage brokers. For more information, visit wholesaleaccess.com.