Black Knight released its December Mortgage Monitor today showing recent mortgage rate hikes have made housing the least affordable it has been since 2010.
Black Knight had said that it now takes 22.2% of median income to purchase the median-priced home in the fourth quarter of 2016 saw a 10% rise in the principal and interest payment required to purchase the median-priced home.
The U.S. housing market is experiencing the most pressure from the high prices since the housing recovery began, but still is more affordable than pre-bubble “norms.”
Black Knight had also shown a distinct correlation between income tax refund disbursements and delinquent mortgages curing to current status which positively influences mortgage performance statistics.
The data had shown that during tax season, approximately 300,000 additional borrowers paid their loans current in February and March alone, on top of normal monthly cure activity. FHA and VA loans led the charge with a cure rate at 40%.
Black Knight Data & Analytics Executive Vice President Ben Graboske had said:
“Looking at IRS filing statistics, we see that nearly one in five Americans file their returns within the first two weeks of tax season, and over 40 percent had completed their taxes by the first week in March. Unsurprisingly, incentive played a big role in this timing; not only were Americans who filed early more likely to receive a refund than those filing later, but they also received larger refunds on average.
Likewise, mortgage cures – delinquent borrowers who bring themselves back to current status – correspondingly spike in February and March as well, suggesting that some portion of Americans are using their tax refunds to make past-due payments on their mortgages,” said Graboske.
“In recent years, this has meant nearly 300,000 borrowers on average paying their loans current in February and March alone, on top of normal cure volumes for the typical month. All things being equal, there’s no reason to expect this tax season to be any different.
“We see this increase in cures across the delinquency and foreclosure spectrum, but it is most pronounced in the early and moderate stages of delinquency. This makes sense, in that a tax refund may be sufficient to pay a few months of past-due mortgage payments, but is likely not enough to bring a homeowner out of severe delinquency. Likewise, the most pronounced impact was seen among FHA/VA borrowers, who might be expected to have less cash reserves on hand and therefore be more dependent upon the infusion of funds during tax refund season to pay down late payments.
“FHA/VA borrowers see loan cures increase by an average of 40 percent in February and March – as compared to just 26 percent for GSE loans. In fact, FHA/VA loans see the most seasonal fluctuation in delinquency rates overall throughout the year compared to other categories. While the inflow in early spring from tax refunds gives these borrowers a needed infusion of funds, the data also shows they tend to struggle more when the funds burn off late in the year and money becomes tight around the holiday spending season.”
Source: Black Knight