Tracking and Explaining Big Picture Shifts in Mortgage Risk Factors

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Posted To: MND NewsWire

The effects of low interest rates continue to echo through the mortgage markets. Those rates can be credited, at least in part, with a change in the risk profile of conventional home purchase loans. According to CoreLogic’s Archana Pradhan, writing in the company’s Insights blog, the average debt-to-income ratios for those loans declined during the third quarter of 2019 compared to a year earlier, most likely because of lower mortgage payments. At the same time, loan to value (LTV) ratios for those loans moved higher. Pradhan says DTI and LTV, two of the three credit-risk attributes of borrowers, have varied dramatically over the last 20 years. Starting in 2014 the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac loosened their underwriting policies to make loans more available…(read more)

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