More mortgages are ‘sub-risky’ across the US

(NewsNation) – Nearly 1 in 37 homes are now worth much less than their remaining mortgage balance, according to New data Released Thursday.

Nationally, the share of “seriously delinquent” mortgages — that is, homes with an outstanding loan that is at least 25% more than market value — rose from 2.6% to 2.7% in the first quarter, according to real estate data firm ATTOM.

However, this share is still well below the pre-pandemic level when One of 15 Homes (6.6%) fall into this category.

In a statement, Rob Barber, CEO of ATTOM, said homeowners continue to benefit from rising equity, but noted that “the windfall is slowly starting to erode.”

The new report found that many states, especially in the South, have a much higher share of dangerously underwater homes than the rest of the country.

Louisiana leads the nation, with nearly one in nine mortgages (11.3%) experiencing severe mortgage depreciation, according to the report. Meanwhile, Kentucky saw the largest quarterly increase, jumping from 6.3% to 8.3%.

If a homeowner overpays and the value of the property declines, they could slide into negative equity and become “underwater” on their mortgage.

This was less of a concern for longtime homeowners who have seen their home equity skyrocket in recent years, but new homeowners haven’t been so lucky.

Last year more than 10% of new home buyers They had property that was worth less than what they owed. Intense competition for limited inventory and high mortgage rates contributed to this.

Regarding the major metros with the riskiest underwater mortgages, Baton Rouge, Louisiana, tops the list (13.4%), followed by New Orleans (7.3%); Jackson, Mississippi (6.5%); Little Rock, Arkansas (6%) and Syracuse, New York (5.6%).

The share of “equity-rich” homes, defined as properties with loan balances less than 50% of market value, also fell in the first quarter from 46.1% to 45.8%, according to the report.

The recent decline in stocks isn’t necessarily bad news for home shoppers because it could signal a broader decline in home prices.

“Amid recent trends, this year’s spring buying season will be increasingly important in telling us whether a new long-term market pattern is developing,” Barber said, while also noting that it is too early to tell.

Last week, the average long-term mortgage interest rate rose to its highest level in five months, 7.22%.

Americans were hoping for some relief in the form of interest rate cuts, but after multiple hot inflation reports, the Fed intends to keep interest rates higher for longer.

Today, only 21% of people think it’s a good time to buy a home, which is the lowest level on record, according to Gallup.

Housing costs Now ranked second behind only inflation as the most important financial problem facing American households.