by Calculated Risk on 4/01/2024 12:21:00 PM

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: The Impact of "Golden-Handcuffs" on Mortgage Payments

Brief excerpt:

Press Release: ICE Mortgage Monitor: Trading Up to a 25% More Expensive Home Would More Than Double the Average Mortgage Holder’s Payment

• From 2000 to 2022, upgrading to a 25% more expensive home would have required the average homeowner to increase their principal and interest payment by roughly 40%, or about $400 per month

• Today, that same trade-up buyer’s payment would increase by an average of $1,384 per month, a 103% jump that highlights the real-world pressures keeping current mortgage holders “locked in” to their homes

• Simply giving up their current rate to move across the street to an equivalently priced home in today’s market would result in a nearly 40% increase in P&I – roughly as much as the historical trade-up cost

“Early-payment delinquencies remain elevated”

Here is a graph of the early delinquency rates for Conventional, FHA and VA loans. Conventional loans continue to perform well, but there is concern about FHA and VA loans.

•Early-payment delinquencies remain elevated among recent originations, particularly FHA and VA loan products

• Such delinquencies have edged upward in recent years but remain well below pre-Great Financial Crisis levels, while FHA and conventional mortgages have both improved modestly year over year, with VA loans holding roughly flat

• Though early-payment delinquencies on conventional mortgages remain low, performance of late-2023 FHA and VA loans, originated when rates neared 8% and debt-to-income ratios reached series highs, remain worth watching

There is much more in the article.