Report: Mortgages with higher loan-to-value (LTV) ratios are not only riskier in terms of the likelihood to default, but they can also impact markets by triggering greater losses in home values, according to the most recent Home Value Forecast report from Pro Teck Valuation Services and Collateral Analytics.
“During the housing bubble (2004-2006), it has been well documented that higher loan-to-value (LTV) ratios led to riskier mortgages, but there has been much less research showing the correlation between high LTVs leading to greater price declines,”
“We have found that as home prices decline, homeowners with high LTVs are much less inclined to stay in their homes since they have little or no equity to protect. This leads to more price declines, which has a cascading effect on other high LTV owners and a further depreciation in home values,” the authors explained. New-Home Orders Soar 27% Inventories also rose in May, reaching a 4.1-month supply at the current sales pace.
No comments:
Post a Comment