By Ian McKendry
WASHINGTON (MNI) – The percentage of Americans whose mortgage loans
exceed the value of their homes declined in the second quarter,
according to data analytics firm CoreLogic.
CoreLogic reported Tuesday that 22.5% of all residential properties
were in negative equity at the end of the second quarter compared to
22.7% in the first quarter.
While the percentage of homeowners with negative equity declined,
the firm reported that three-quarters of American’s with negative equity
are paying above-market interest rates on their mortgage.
The report said of the 10.9 million borrowers with negative equity,
eight million are paying above market rates.
“High negative equity is holding back refinancing and sales
activity and is a major impediment to the housing market recovery,” Mark
Fleming, chief economist at CoreLogic said in a statement Tuesday.
“Nationally, the level of mortgage debt remains high relative to
home prices,” Fleming added.
The report found that borrowers with negative equity were more
likely to be paying above market rates than borrowers with positive
equity.
“More than 40 percent of borrowers with 125 percent or higher
loan-to-value (LTV) ratios have mortgages with rates at 6 percent or
above, compared to only 17 percent for borrowers with positive equity,”
the report said.
The report also found that 27.5% of all borrowers have negative or
near negative equity (less than 5%) in their home.
Nevada had the highest percentage of homes with negative equity at
60%, followed by Arizona (49%), Florida (45%), Michigan (36%), and
California (30%).
** Market News International Washington Bureau: 202-371-2121 **
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