by Tanta on 11/16/2007 10:05:00 AM

From National Mortgage News, via Clyde:

Nearly one in three buyers between June 2006 and June 2007 had no skin in their deals, according to new research that represents further evidence of the poor quality of loans that helped fuel the rising tide of delinquencies and foreclosures. Though the study of nearly 10,000 transactions by the National Association of Realtors did not note whether the loans were prime or subprime, it found that 29% of all buyers -- and 45% of all first-timers -- financed the entire purchase price. Somewhat surprisingly, considering that they usually have money from the sale of their previous residence to put into the transaction, 18% of repeat buyers also put up none of their own money.

The NAR press release is here.

I note that in the Greenspan-Kennedy method of calculating MEW, those transactions where a repeat buyer receives sales proceeds for an existing home in excess of the existing mortgage amount, but does not use those proceeds to reduce the mortgage amount on the next home purchase, will end up counting as MEW. It is, after all, equity extraction: the equity from the previous home is "extracted" in the sale, but does not become equity in the new home. This means that the loss of 100% financing for purchases will lower net MEW, just as the loss of some cash-out refinancing options will.