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BORROWERS DEEMED LESS HEALTHY IN Q3
Rise in home prices and LTVs put more financial pressure on
prospective homebuyers.
Recent findings released by online lender
exchange LendingTree reveal the financial health
of prospective borrowers dipped in this year's third
quarter after seeing a sizable improvement in the
second.
LendingTree's Borrower Health Report shows
the national "health score" among borrowers was
79.94 in the third quarter, down 1.56 points from
the prior period. The score is calculated based on
data for average loan-to-value ratios (LTV) and
average credit scores.
The company attributes the decline in borrower health to rising home prices, which boosted
LTVs across the country to a national average of
89.8 percent and put more financial pressure on
potential borrowers.
"Because home prices have been steadily
increasing, this minor slip in the borrower health
score isn't necessarily unsettling," said Doug
Lebda, founder and CEO of LendingTree. "In
order for the housing market to maintain and
improve home prices, there needs to be a growing
pool of well-qualified borrowers in the market for
homes."
The national score also experienced a slight
drag from a dip in the average credit score of
prospective borrowers, which fell four points
quarter-over-quarter to 636 in Q 3.
Even with the decline, the third quarter's health
score is still above the first quarter's reading of 76.44
and Q 3 2012's reading of 72.66—demonstrating
that "mortgage-seekers are in relatively good health
and that there is a broader trend of improving borrower qualification levels," LendingTree said.
Breaking down the data by state, Hawaii led in
terms of borrower health, posting a score of 96.16,
with a higher average credit score (689) offsetting a
relatively higher LTV percentage (89.66 percent).
Other markets with scores above 90 included
the District of Columbia (95.91), New Jersey (91.18),
and California (90.59). All reported average credit
scores in the 670-680 range and LTVs lower than
the national average.
Ledba explained the results were largely
reflective of job market conditions, observing
that states ranking on the list "had enough highly
qualified, active borrowers to support the higher
home prices."
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