IRVINE, Calif.–New data show what many have already surmised when it comes to home ownership—increasingly buyers are having to stretch financially to make a purchase.
Approximately one-in-five conventional mortgage loans made this winter went to borrowers spending more than 45% of their monthly incomes on their mortgage payment and other debts, the highest proportion since the housing crisis, according to data released by CoreLogic. That is almost triple the proportion of such loans made in 2016 and the first half of 2017, CoreLogic reported.
The reason is no secret—home values have skyrocketed, pricing many people out of homes in numerous markets, as inventory remains limited. In addition, the average rate on the 30-year, fixed-rate mortgage hit a recent high of 4.40%, up nearly half a point since the beginning of the year, according to Freddie Mac.
Both Freddie Mac and Fannie Mae have experimented with or introduced some programs aimed at making it easier to purchase homes, but others have said the moves have only added to pressures in the market by bringing even more buyers.
According to CoreLogic, the share of new buyers with debt-to-income levels in the 46%-50% range remains well below the peak of just under 37% seen in 2007, but it is nearing the levels of 2004-05, the years leading up to the bubble.
During Q4, 2017, approximately 78% of the loans with debt-to-income ratios above 45% were made to borrowers with credit scores of 700 or more, according to Inside Mortgage Finance.