Black Knight Financial Services analyzed U.S. mortgage holders’ levels of non-mortgage-related debt and found those levels are at their highest in over 10 years.
As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, non-mortgage debt among U.S. mortgage holders bears close watching due to its potential impact on both the lending and housing industries.
“Mortgage lenders know exactly how much debt borrowers are carrying at the point of origination, but often lose sight from that point forward,” said Graboske. “Non-mortgage debt is another key piece of the home affordability puzzle — the more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations.
“What we’ve found is that mortgage holders today are carrying more non-mortgage debt than at any point in the past 10 years, with an average of $25,000 per borrower. That’s $1,400 more on average than one year ago, and nearly $2,600 more than in 2011,” he said. “The primary driver of this increase is a rise in auto-related debt, which accounted for 81% of the overall non-mortgage debt increase over the past four years. We also noticed a clear correlation between non-mortgage debt and borrowers inquiring about a new mortgage, with those who have recent mortgage inquiries on their credit reports carrying nearly 40% more debt than borrowers who do not.”
Black Knight found that the student loan debt of U.S. mortgage holders is at all-time high: 15% of mortgage holders are carrying student loan debt, with average balances of nearly $35,000. The average student loan debt for all mortgages has more than doubled since 2006, and the share of mortgage holders carrying that debt has increased by 44% over that 9-year span.
While the GSEs hold more than half of all mortgages with accompanying student loan debt, the situation is much more pronounced among FHA borrowers. Roughly one quarter of all active FHA loans carry student loan debt, as compared to just 13 percent of GSE loans.
In fact, FHA’s market share of post-crisis mortgages with student loan debt is nearly twice that of those without, suggesting that borrowers with student loan debt may be willing to trade higher payments in the form of mortgage insurance premiums for reduced down payments.
Leveraging data from the Black Knight Home Price Index, Black Knight also looked at the current state of negative equity among U.S. mortgage holders and found continuing improvement there.
“Over the first five month
read more: http://www.housingwire.com/articles/34655-black-knight-borrowers-carry-highest-level-of-non-mortgage-debt-in-a-decade
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