Mortgage Daily

Published On: December 8, 2016

Home lenders’ loan portfolios have grown less risky as average loan-to-value ratios have improved and average home equity has grown.

As of Sept. 30 of this year, the aggregate principal balance of U.S. residential loans that were outstanding amounted to $9.249 trillion.

The country’s book of mortgages grew from $9.186 trillion the prior quarter. As of the same date last year, the total was $8.998 trillion.

Those statistics and more were reported by CoreLogic Inc. in its Equity Report Third Quarter 2016.

The average LTV ratio was 55.4 percent. Lender equity improved from mid-2016, when the average was 56.0 percent. The average LTV ratio stood at 57.3 percent at the same point in 2015.

Average LTV ratios on properties valued at more than $500,000 was around 45 percent, while it soared to around 75 percent on properties valued at less than $100,000.

The lowest average LTV ratio was in Hawaii: 44.1 percent. Next was New York’s 44.9 percent, then California’s 48.2 percent, Massachusetts’ 51.3 percent and Washington’s 51.7 percent.

Oklahoma’s 67.4 percent average LTV ratio was the highest in the nation.

At 47.9 million, the number of properties with positive equity increased by 384,000 from the second quarter.

Net homeowner equity grew to $7.438 trillion in the third quarter of this year from $7.211 trillion the prior period and $6.712 trillion
a year prior.

There were 3.2 million U.S. mortgages with negative equity
in the most-recent period, fewer than 3.6 million in the second quarter and 4.2 million in the third-quarter 2015.

Negative equity totaled $281.9 billion in the third-quarter 2016. The amount receded from $284.0 billion three months earlier and $306.9 billion a year earlier.

Of the borrowers with negative equity, 1.8 million had just a first lien and 1.4 million have first and second liens.

On homes valued at more than $200,000, ninety-six percent had positive equity. The positive-equity share dropped to 90 percent on homes valued at less than $200,000.

In Nevada, 14.2 percent of borrowers had negative equity, the worst share of any state. Florida followed with 12.5 percent, then Arizona’s 10.6 percent, Illinois’ 10.6 percent and Rhode Island’s 10.0 percent.

At the other end of the scale was Texas, where 98.4 percent of borrowers had positive equity. After that was Alaska with 98.1 percent, then 97.9 percent in Washington, Utah and Colorado.

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