A new report indicates that the average U.S. loan-to-value ratio on purchase financing has increased over the past two years. Mississippi ranked as the state with the highest LTV.
The average LTV ratio on mortgages used to purchase residential properties was 83.9 percent as of May 31.
The LTV ratio is based on transactions across the country involving 30-year conventional loans. The average downpayment was 16.1 percent.
LendingTree, which based its findings on average downpayment percentages offered to LendingTree customers, said that average downpayments have dropped 9.4 percent since May 2011.
LTVs, which were calculated by subtracting LendingTree downpayment levels from 100 percent, could potentially reflect subordinate financing — though such loans have been rare since the onset of the financial crisis.
Mississippi had the highest average LTV ratio: 88.1 percent.
West Virginia was next at 88.0 percent, then 87.6 percent in Alabama, 87.3 percent in Kansas and 86.8 percent in Missouri.
At the other end of the spectrum was New Jersey, where the average LTV ratio was just 79.5 percent.
California was close behind with an average LTV of 80.9 percent.
Next was 81.0 percent in New York, 81.7 percent in Massachusetts and 81.8 percent in Hawaii.
“As the housing market begins to improve, lenders are beginning to loosen their guidelines to more normalized standards and approve loans with lower down payments,” LendingTree Chief Executive Officer Doug Lebda said in the report. “Although a good credit score is still important to have, borrowers may have an easier time qualifying for loans after years of tight guidelines, especially as home prices rise and we see fewer homeowners underwater.”
