The latest Mortgage Monitor report from Black Knight Financial Services revealed that the rates of mortgage delinquency and negative equity among homeowners continue to fall, contributing to rising prices but also a healthier, more sustainable overall market.
In a related trend, with each month there are also more loans in the foreclosure process that have matured, and the number of distressed loans overall have been greatly reduced. Negative equity levels, consequently, were down through March in non-judicial and judicial states - those in which the foreclosure process must go through the courts - and more importantly, about 50 percent of all borrowers are currently carrying both positive equity and credit scores of 700 or higher. Whether through better research, more secure financing, improved home buyer consultation or other means, the average owner is becoming more responsible with their mortgage.
Kostya Gradushy, manager of loan data and customer analytics for Black Knight, stated that, reviewed all together, the data points from the firm's latest report are indicative of the industry's return to health.
"Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers," Gradushy said. "Looking at current combined loan-to-value, we see that while four years ago 34 percent of borrowers were in negative equity positions, today that number has dropped to just about 10 percent of active mortgage loans."
More stable ownership presents greater opportunity for buyers
By comparison, through the first quarter of 2010 - in the midst of the recession and housing downturn - only about a third of active mortgages were characterized by positive equity. The Black Knight report also found that affordability is better for prospective buyers now than in years prior to the housing crisis, when comparably high home prices were often exacerbated by ballooning interest rates. Now, while appreciation rates vary by state, the national mortgage-to-income ratio is 22 percent, a figure only four states were below in 2006.
Despite the intimidation many shoppers might feel from rising home prices, this report actually should provide prospective home buyers with some relief. The mortgage market is generally more stable now, and as more current owners gain equity, there figure to be more sellers putting their homes on the market. That trend will expand the available inventory and not only present buyers with more options, but also help ease the rates of appreciation that have boxed many out to this point.