Refinancing Share Falls to 44% as Volume Drops Sharply.

Washington -- In the third quarter, refinancing fell to an almost four-year low as conventional funders turned in their second-worst quarterly performance in more than two years.

According to survey figures compiled by Mortgage Servicing News, all residential lenders funded $663 billion in product with refis accounting for 44% of production.

Since the first quarter of 2001, refis have accounted for between 53% and 77% of loan production. Refis peaked in the first quarter of 2003 at 77% of originations but have remained strong nonetheless.

The last time refis were lower than the third-quarter figure was back in the fourth quarter of 2000 (26.8% of production).

Even though total originations fell by 45% (compared to the record third quarter of 2003), the subprime niche continued to shine.

Subprime lenders (A- to D in quality) originated a record $160 billion in product, accounting for 24% of all U.S. loans funded. (The previous subprime record was $157 billion, set in the second quarter.)

Ameriquest Mortgage, Orange, Calif., is believed to be the largest subprime funder. In the third quarter, according to MSN, the company funded $16 billion in subprime loans.