A recent article at DSNews reported the equity to borrowers is hitting an 11-year high. Could an increase in home prices affect mortgage lending trends in the next year?
Continued increases in home prices is driving the strongest equity market in a decade, according to the latest Mortgage Monitor Report by Black Knight Financial Services. The report, looking at February numbers, found that appreciation nationally has generated $4.7 trillion in equity available to borrowers, the highest it’s been since 2006.
Appreciation is also having a profound effect on the number of underwater borrowers, Black knight reported. An annual home price appreciation of 5.5 percent in 2016 helped raise number of U.S. mortgage holders with tappable equity to 39.5 million. Two thirds of that equity belongs to borrowers with current interest rates below today’s 30-year interest rate, and 78 percent belongs to borrowers with credit scores of 720 or higher.
Overall, Black Knight reported, the total U.S. loan delinquency rate in February was 4.21 percent, a 1 percent drop from January. Mississippi, Louisiana, Alabama, West Virginia, and New Jersey had the highest rates of delinquency; Idaho, Montana, Minnesota, Colorado, and North Dakota had the lowest.
Ben Graboske Black Knight executive vice president for Black Knight’s Data & Analytics division, said that the current equity landscape, in conjunction with a higher interest rate environment, will likely affect mortgage lending trends over the coming year.
Read the full article at DSNews.