Refis Dominate First-Half of '04 Production.

Almost 60% of the $1.4 trillion in home loans funded in the first half were refinancings, according to survey figures compiled by Mortgage Servicing News.

In the first half of last year refis accounted for a record 75% of all mortgages originated.

This newspaper also found that retail lenders continued to dominate the market in the first half, accounting for 44.1% of all loans funded in the U.S.

Wholesale and correspondent fundings comprised the rest - some 55.9% of all mortgages. In times of heavy refi activity (such as the past two years), retail channels tend to do well as the nation's mega-lenders recapture loans that are already in their portfolio.

Most mortgage bankers believe production will drop steadily from the second quarter when the industry funded $818 billion. (In the first quarter lenders originated $610 billion.)

The first half was a good one for many firms, particularly subprime lenders, but overall volume fell by 29.7% compared to the first half of 2003. (Last year was a record year for residential production with $3.9 trillion in loans funded.)

But in the first half of this year subprime production totaled $277 billion, an amazing 66% increase from the first two quarters of 2003.