Fewer Borrowers Relying on High LTV Loans

Just as the government sponsored enterprises Fannie Mae andrnFreddie Mac are launching new 97 percent conventional loans, RealtyTrac isrnannouncing that demand for such low downpayment loans has never been…lower. Arnrecently completed study by the company looked at 20 million purchase mortgagesrnfor single family homes and condos originated between 2004 and 2014 and foundrnthe share of buyers putting down 3 percent or less hit its lowest point inrn2014. </p

Of course this may not be a factor of demand, RealtyTrac didrnnot venture into that area.  More likelyrnit is the result of stricter underwriting standards, perhaps for privaternmortgage insurance as well as the loans themselves.  Nonetheless, 25 percent of buyers takingrneither conventional or FHA loans in 2014 put down less than 3 percent for arnhome purchase compared to 27 percent in 2013.</p

Low downpayments hit a peak during the period in 2009 whenrnthe homebuyer tax credit motivated purchases among first-time homebuyers, thernones most likely to put the minimum down. The share has dropped every yearrnsince them. Low down payments had a 37 percent share of sales in 2006, the peakrnof the housing bubble.</p

</p

The weightedrnaverage down payment did not change much over the study’s ten years, waveringrnbetween around 13 and 16 percent.  Inrnthat atypical tax credit year of 2009 the average down payment was at a low ofrn12.9 percent and it hit a high of 15.6 percent in 2013.  Last year the average was 15.4 percent.  The un-weighted average dollar amount of therndownpayment reached a high of $58,900 in 2013, based on an average purchasernprice of $291,428.  </p

</p

RealtyTrac found a strong correlationrnbetween the percentage put down on a purchase and the price of the home.   For purchases where there was no downrnpayment (the combined loan amount was actually more than the purchase price,rntypically indicating a down payment assistance program or purchase-rehab loanrnwas involved) the average sales price was $154,214, while for purchases with arndown payment of less than 3 percent but more than 0 percent, the average salesrnprice was $190,304.  For every percentrnthe down payment increased the average purchase price also rose, an exceptionrnbeing between the 10 to 15 percent and 15 to 20 percent ranges. On the otherrnend of the spectrum, the average purchase price in 2014 was $502,213 forrnpurchases when the borrower put down 50 percent or more.</p

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.