Black Knight’s Mortgage Monitor: Homes in Lowest Price Tiers Continue to See Greatest Appreciation, Tightest Affordability...
March 05 2018 - 9:00AM
Today, the Data & Analytics division of Black Knight, Inc.
(NYSE:BKI) released its latest Mortgage Monitor Report, based on
data as of the end of January 2018. This month, Black Knight looked
at the impact of recent interest rate rises on home affordability.
While affordability remains better than long-term averages
nationally, home prices at the lower end of the market are less
affordable than the national average, particularly for those in
lower income levels. As Black Knight Data & Analytics Executive
Vice President Ben Graboske explained, the root of the issue has
been the consistently higher-than-market-average rate of home price
appreciation among properties in the lowest 20 percent of home
prices nationally.
“Prices on Tier 1 properties – those in the lowest 20 percent of
home values – have been appreciating at a faster rate than all
other tiers for 67 consecutive months,” said Graboske. “The annual
rate of appreciation for these homes is 1.9 percent higher than the
market average, and more than 3.6 percent higher than that of
properties in the top 20 percent of prices (Tier 5). Larger overall
increases in value among lower-priced homes is not just a recent
trend, though; the same dynamic is observed when looking back over
the past 15 years. While the nearly 50 percent increase in the
median home price over that period has significantly outpaced the
approximately 40 percent growth in the median income, lower
interest rates today have more than offset that difference.
However, according to Census Bureau data, income growth in the
lower quintiles has not kept up with the higher ends of the market.
This has clear implications for home affordability in this segment
of the population, even more so in light of the 43 BPS increase in
interest rates seen in just the first six weeks of 2018.
“Overall affordability remains better than long-term historical
averages, even taking the recent rate jump into consideration.
Currently, it takes 23 percent of the median income to purchase the
median home nationally, which is still 1.9 percent below the
averages seen from 1995-2003. But those in lower income levels are
much closer – if not above – such long-term benchmarks. It seems
evident that further affordability reductions from rising interest
rates could put more pressure on lower-income buyers by increasing
competition for lower priced homes, as borrowers’ overall buying
power is diminished.”
The spike in 30-year fixed mortgage interest rates also had the
effect of cutting the population of borrowers with interest rate
incentive to refinance by nearly 40 percent in 40 days.
Approximately 1.4 million borrowers lost the interest rate
incentive to refinance in just the first six weeks of 2018. This
leaves 2.65 million potential candidates who could still both
benefit from and likely qualify for a refinance at today’s rates,
the smallest that population has been since late 2008, prior to the
initial decline in rates during the recession. This represents
another challenge to a consistently shrinking refinance market.
Refinance lending declined significantly in 2017, with the total
number of originations down 29 percent, and total volume down by
$355 billion, a 34 percent year-over-year decline.
As was reported in Black Knight’s most recent First Look news
release, other key results include:
Total
U.S. loan delinquency rate: |
4.31% |
Month-over-month change in delinquency rate: |
-8.57% |
Total
U.S. foreclosure pre-sale inventory rate: |
0.66% |
Month-over-month change in foreclosure pre-sale inventory
rate: |
1.84% |
States
with highest percentage of non-current* loans: |
MS, LA,
FL, AL, WV |
States
with lowest percentage of non-current* loans: |
ID, WA,
OR, ND, CO |
States
with highest percentage of seriously delinquent** loans: |
FL, MS,
LA, TX, AL |
*Non-current totals combine foreclosures and delinquencies as a
percent of active loans in that state. **Seriously delinquent
loans are those past-due 90 days or more.Totals are extrapolated
based on Black Knight’s loan-level database of mortgage assets.
About the Mortgage Monitor The Data &
Analytics division of Black Knight manages the nation's leading
repository of loan-level residential mortgage data and performance
information on the majority of the overall market, including tens
of millions of loans across the spectrum of credit products and
more than 160 million historical records. The company's research
experts carefully analyze this data to produce a summary
supplemented by dozens of charts and graphs that reflect trend and
point-in-time observations for the monthly Mortgage Monitor Report.
To review the full report, visit:
http://www.BKFS.com/CorporateInformation/NewsRoom/Pages/Mortgage-Monitor.aspx
About Black KnightBlack Knight
(NYSE:BKI) is a leading provider of integrated software, data and
analytics solutions that facilitate and automate many of the
business processes across the homeownership lifecycle.
As a leading fintech, Black Knight is committed to being a
premier business partner that clients rely on to achieve their
strategic goals, realize greater success and better serve their
customers by delivering best-in-class software, services and
insights with a relentless commitment to excellence, innovation,
integrity and leadership. For more information on Black Knight,
please visit http://www.blackknightinc.com/.
For more information:
Michelle
Kersch904.854.5043michelle.kersch@bkfs.com
Mitch Cohen
704.890.8158mitch.cohen@bkfs.com
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