MReport September 2018

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TH E M R EP O RT | 75 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Where are Homeowners Spending the Most on Mortgages? Zillow finds the affordabilty of houses is decreasing. M ortgage affordability is at its worst point in a decade, accord- ing to Zillow. A new report from the company finds that buying and owning a home in Q1 was at its most bur - densome for homeowners since the second quarter 2009. According to Zillow, the share of income needed for monthly mortgage payments on the median U.S. home increased to 17.1 percent from Q 4 of 2017 and compares to 2009's 17.5 percent in the year's second quarter. "Back then, the trend was different," Zillow reported. "Mortgages were becoming more affordable as home prices and interest rates fell in tandem during the early years of the recession, well after the share of income needed to afford the typical home peaked at 25.4 percent in 2006 during the height of the bubble." According to Zillow, "the af - fordability edge has worn so thin in nine of the 35 largest housing markets that mortgage payments are now a bigger financial burden than they were historically." Following the most recent trends involving the least-afford - able markets, the West Coast leads the pack in burdened house- holds. According to Zillow, in the Bay Area, the least-affordable metro in Q1, homeowners and renters in Q1 paid as much as 68 percent of their income towards household expenses, and in San Jose, mortgage holders paid 51 percent towards mortgage pay - ments. That's high even for San Jose, where the historical average is around 35 percent. "If mortgage rates reach 5 per - cent next year, as many econo- mists expect," Zillow reported, "home shoppers in an additional seven markets would face greater mortgage burdens than buyers did historically." Another figure from Q1 is that the median U.S. home was worth 3.54 times the typical household income. Between 1985 and 2000, that figure was 2.78, according to Zillow. The issue stems from the one- two punch of rising mortgage rates and continuing home-value appreciation. But Zillow reported, "mortgage rates and housing costs represent one side of the afford - ability coin; income is the other." While home values have recovered nationally, wages have been slower to bounce back, Zillow reported. And a possibly ominous trend is that the last time the price-to-income ratio was this high was in the second quarter of 2008, "when it was 3.63, on its way down from housing-boom highs." Times are even harder for rent - ers. The typical renter paid 28.8 percent of U.S. median income in the first quarter, Zillow reported. That's up from 26 percent be - tween 1985 and 2000, but down from a peak of about 30 percent in the second quarter of 2015. Housing Wealth Increases Among Senior Homeowners Home-equity loans to fund retirement are low on older Americans' agenda. H ousing wealth among senior homeowners is on the rise and approached a new high in the first quarter of 2018, touching $6.8 trillion, according to data on the NRMLA/ Risk Span Reverse Mortgage Market Index (RMMI) released by the National Reverse Mortgage Lenders Association (NRMLA). The data indicated that housing wealth among senior homeowners had increased by $177 billion in Q1 when compared to the previous quarter. The rise was driven by an increase of $182 billion or 2.2 percent in the housing values owned by this group. However, mortgage debt among the group increased only 0.3 percent or $5.4 billion compared to the previous quarter, the data revealed. The RMMI also rose to 244.73 in the first quarter, reaching its highest point since the index was introduced in 2000. Home equity among this set of homeowners has been rising steadily since the second quarter last year driven by rising home prices. Yet, seniors are wary of taking loans against their homes. A recent study on how owners are using their home equity found that a very small percentage of borrow - ers against their home values were seniors. The study found that of all the reasons that people borrowed against their homes, just over 1 per - cent of home-equity loan requests were to fund retirement made by those over the age of 63 years. According to a report on retirement security published by the Bipartisan Policy Center's Commission, total home equity among senior homeowners rivals their retirement savings. The gap between the two is narrowing con - siderably, with Americans owning more than $12.5 trillion in home eq- uity in 2017, compared with the $14 trillion held in retirement savings. The report noted that various mechanisms existed for tapping home equity to fund retirement: downsizing on homes, using a reverse mortgage, or selling a home to rent. "Federal and state tax policy, however, actually subsidizes the use of home equity for preretirement consumption, leaving many retired homeowners burdened with debt and with less equity to support retirement security," the report said. Keystone Award Finalist Laurie A. Maggiano Legacy Award Rushmore Loan Management Services Congratulates Jocelyn Martin-Leano Rushmore is proud to congratulate Jocelyn Martin-Leano on being named a finalist for a Five Star Conference & Expo Keystone award, recognizing the remarkable achievements of women across mortgage servicing and housing. Martin-Leano has been nominated for the Laurie A. Maggiano Legacy Award, honoring women who, through their tireless efforts, collaboration, and ingenuity, have powerfully influenced the industry and homeownership nationwide. Throughout her career, Martin-Leano has differentiated herself as a strategic thought leader who is best known for her strong belief that the most important element of success lies with the employees on her team. As a woman and a minority, Martin-Leano is leading the way for Rushmore's employee population of 55 percent women and 80 percent minorities to follow in her footsteps. We salute Jocelyn Martin-Leano's accomplishments and know that, with her leadership and inspiration, the sky is the limit. | 1.888.504.6700

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