How homeowners benefit from massive equity and lower fixed rates

"Currently, 40% of homeowners don't have a mortgage loan at all and of those who do, 70.4% have fixed rate loans of 5% or less. This is why many homeowners in America have excellent FICO scores; their long-term debt costs remain fixed as their wages rise. One of the hallmarks of the housing bubble crash period was the significant number of foreclosures happening in America. With so many distressed homeowners and underwater mortgages, it was the biggest bust in American economic history."

"One significant aspect of the housing market leading up to 2008 was the dramatic increase in exotic loan structures, primarily adjustable-rate mortgage (ARM) products, which accounted for over 30% of loans originated at that time. In contrast, more than 90% of the loans issued in the United States after 2010 have been long-term fixed-rate products. Between the run-up to the housing crisis in 2008, the loan-to-value ratio reached as high as 85%. Currently the loan-to-value ratio stands at 44.2%."

Homeowner balance sheets are substantially stronger than during the 2008 crisis. Exotic adjustable-rate mortgage products comprised over 30% of originations before 2008, whereas more than 90% of post-2010 loans are long-term fixed-rate products. Forty percent of homeowners have no mortgage, and 70.4% of borrowers hold fixed-rate loans at 5% or lower. Loan-to-value ratios peaked near 85% before the crash and currently average 44.2%. Median down payments have risen to 21st-century highs after falling from 2001 to 2008. Foreclosure and bankruptcy rates surged between 2005 and 2008 and culminated in the Great Financial Recession.

Read at www.housingwire.com