Black Knight Financial Services recently released their latest Mortgage Monitor Report (for December 2015) where they found that the mortgage payment-to-income ratio is still favorable by historical standards. However, they say the long-term impact of rising interest rates and home prices on affordability varies with geography and warrants close observation moving forward.
Key takeaways:
- 21% of median income needed to purchase national median-priced home; 2000 – 2002 average was 26%
- At current rate of home price appreciation and 50-basis-point-per-year rise in rates, eight states would surpass pre-bubble affordability levels within 12 months; 22 states would within 24 months
- 42% of Q3 2015 first lien refinances were cash-out, highest share since 2008; average cash-out amount over $60,000
- Average post-cash-out refinance loan-to-value (LTV) in Q3 2015 was lowest on record at 67 percent
