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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 56 June 2024 J O U R N A L from Redfin, nearly two of every five (38%) homeowners don't believe they could afford to buy their own home if they were purchasing it today. Nearly three in five (59%) homeowners who answered this question have lived in their home for at least 10 years, and another 21% have lived in their home for at least five years. That means the majority of respondents have seen housing prices in their neighborhood skyrocket since they purchased their home, as the median U.S. home-sale price has doubled in the last 10 years and has shot up nearly 50% in the last five years alone. Exploring the Marketplace LendingTree found that 40.58% of those seeking a home equity loan cited paying for home improvements as their primary reason for tapping into their equity. Nationwide, this was the most commonly cited reason why homeown- ers wanted to tap into their home equity but was not the most popular reason cited in every state. Of those polled, 33.78% of home- owners considered tapping their home's equity to help with debt consolidation. Some states, including Wyoming, Idaho, and South Dakota, debt consolidation was the most cited reason. Tapping into a home's equity for investment purposes (other than home improvements) was the foremost reason for 7.68% of homeowners. Investments cited included buying a property to rent or purchasing shares of a company via the stock market. Just 2.56% of homeowners considered using their home's equity as retirement income. And, a significant percentage of homeowners, 15.39%, considered a home equity loan for a reason other than the ones listed above. Though we don't know how these potential borrowers hoped to use a home equity loan, reasons LendingTree considered was paying for college, paying for a wedding, or dealing with emergency-related expenses. Where is equity being tapped? According to LendingTree, the states where the largest share of homeowners considered tapping home equity for home improvements were found in: » Mississippi (48.21%) » Maine (46.57%) » West Virginia (44.31%) The states that reported largest share of homeowners that considered tapping into home equity for debt consolidation were: » Wyoming (44.21%) » Idaho (43.26%) » South Dakota (40.86%) LendingTree found that the states where the largest share of homeowners considered tapping home equity for investment purposes were: » Utah (11.10%) » Alaska (10.09%) » Hawaii (9.78%) States that reported the largest share of homeowners who considered tapping home equity for retirement were: » Nevada (3.73%) » Vermont (3.41%) » Florida (3.28%) And states that reported the largest share of homeowners who considered tapping home equity for another reason were: » Hawaii (18.48%) » New Mexico (17.88%) » Alaska (17.87%) MORTGAGE PAYMENTS REPORT SHOWCASES ONGOING HEADWINDS A ccording to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI), homebuyer affordability declined in April due to rising interest rates and other costs increasing from a median $2,201 in March to a median $2,256, a $55 increase. The PAPI is calculated by measuring how new monthly mortgage payments vary across time—relative to income— using data from the MBA's Weekly Applications Survey. Additional Key Findings From the Report » The national median mortgage pay- ment was $2,256 in April—up $55 from March. It is up $144 from one year ago, equal to a 6.8% increase. » The national median mortgage payment for FHA loan applicants was $1,955 in April, up from $1,898 in March and up from $1,750 in April 2023. » The national median mortgage pay- ment for conventional loan applicants was $2,271, up from $2,222 in March and up from $2,170 in April 2023. » The top five states with the highest PAPI were: Idaho (267.2), Nevada (264.9), Arizona (236.4), Florida (227.4), and Rhode Island (224.8). » The top five states with the lowest PAPI were: Alaska (131.6), Louisiana (134.1), Connecticut (134.2), New York (139.1), and Washington, D.C. (141.2). » Homebuyer affordability decreased for Black households, with the national PAPI increasing from 180.4 in March to 183.1 in April. » Homebuyer affordability decreased for Hispanic households, with the national PAPI increasing from 166.4 in March to 168.9 in April. » Homebuyer affordability decreased for White households, with the national PAPI increasing from 176.8 in March to 179.5 in April. "Homebuyer affordability condi- tions declined further as mortgage rates remained above 7% in April, sidelining many prospective buyers from entering the housing market," said Edward Seiler, MBA's Associate VP, Housing Economics, and Executive Director, Research Insti- tute for Housing America. "In addition to lower mortgage rates, more housing inventory is desperately needed in mar- kets throughout the country this summer to alleviate these tough affordability conditions." An increase in MBA's PAPI—indica- tive of declining borrower affordability conditions—means that the mortgage payment to income ratio (PIR) is higher