[Note from Admin: This is the exact way it went prior to the last collapse of the economy]
Over the past 12 months, less than 10% down loans increased to a share of nearly 40% of all purchase loans, or about 1.5 million borrowers. Black Knight explained the higher number of loans is also due to a shift toward the purchase market and away from refinances.
This increase is significant considering the past four years all showed yearly declines in high LTV lending. Now, however, high LTV lending increased its market share as well as volume.
But while borrowers are putting less down on a home, the growth did not spill into the less than 5% down lending, despite lenders best efforts. This year, multiple companies announced a move into the 3% down market, but it seems the new products did little to inspire significant growth.
But Black Knight was quick to differentiate the housing market today from the pre-crisis era from 2005 to 2006.
“However, low down-payment purchase lending today has a much different risk profile than it did back in 2005-2006 during the run-up to the financial crisis,” said Ben Graboske, Black Knight Data and Analytics executive vice president. “At that time, half of all low-down-payment purchase originations involved piggyback second liens, as opposed to a single high-LTV first lien mortgage.”
“It’s also worth noting that while the total share of purchase lending going to borrowers putting less than 10% down was relatively similar then to what we see today, today’s low down-payment mortgage products and secondary risk characteristics are markedly different,” Graboske said.
He explained that while a large portion of low down-payment mortgage were adjustable-rate mortgages during the pre-crisis years, that is not the case today. https://www.housingwire.com/bl...gages-at-7-year-high