Fewer Borrowers Underwater on Their Mortgage Loan


Only 8% of borrowers were underwater on their mortgage in July 2014. This is revealed in the latest Mortgage Monitor report compiled by Black Knight Financial Services. The share of borrowers with underwater mortgage reached its lowest level since 2007. It is over four times smaller compared to its peak of 33% in 2011.

The share of borrowers with home equity between 0% and 10% was also 8% in the middle of 2014. It went down from 14% in 2011.

The share of new mortgage loans with high loan-to-value ratio between 96% and 100% is 18.3% in 2014. The share of high LTV loans decreased considerably from its size during the peak of the housing market crisis. It was 30.7% in 2010. However, it is still higher compared to 2005 when it was 9.8%.

The FHA residential loans formed the largest share of high LTV mortgage loans. The share of high LTV mortgages originated by all other investors apart from FHA and VA in 2014 is 12.39%. In 2007, it was 64.6%. In 2008, it was 15%.

Refinance at
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While the share of borrowers who are underwater on their mortgage is shrinking, the share of those who can benefit from home loan refinance is increasing. According to the Mortgage Monitor report, the reduction in the 30-year fixed mortgage rate led to an increase in the share of borrowers who could benefit from refinancing by 25%.

Previously about 6 million borrowers could secure a mortgage refinance deal based on their LTV and credit score. Now their number is 7.4 million. The report indicated that refinancing is feasible for another 1.4 million borrowers with mortgage rates between 4.5% and 4.75%. The increase was also driven by the rising home prices which boosted the home equity of borrowers. The report estimated that another 1.7 million borrowers paying rates between 4.25% and 4.5% could arguably benefit from mortgage refinancing.



Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info

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