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A Lookback on Combined Loan-to-Value Ratios

An analysis of the CLTV ratio, by price bucket, shows that homebuyers in 2019 borrowed more for homes in the same price range than they did in 2015, according to a new study from CoreLogic. The report reveals that "median home price in 2019 for mortgaged home sales was roughly $260,000, with an estimated average CLTV of 89%. Conversely, in 2015, homebuyers averaged a CLTV of 88% for homes when spending the same amount."

The report also shows that, adjusting for home-price appreciation, CLTVs at the low end have not experienced much change. CoreLogic explains that, from 2015–2019, the median sale price increased by 17%. The report states, "While in 2015, purchase mortgages at the median sale price had roughly the same average CLTV as those sold around the median price in 2019. By accounting first for home-price appreciation, we can provide a fair comparison of the average CLTV by price bucket."

Adjusting 2015 median sale price amounts in light of 2019 home appreciation, the average CLTV for homes sold was roughly the same in both years, CoreLogic reports. For home sales with a sale price amount equal to or exceeding 125% of the national median (considered "high-tier" by CoreLogic), "the CLTV in 2019 averaged about 1 percentage point less than in 2015."

Between 2015–2019, nationwide home values grew an average of 22%—"possibly contributing to the improvement in CLTV for high-end home purchases," according to CoreLogic. As such, homebuyers selling an existing home in 2019 "would likely have benefited from increases in home equity, resulting in additional funds to put towards a down payment on the new home."

"In recent years we’ve seen a steady pattern of higher CLTV ratios within low-end purchases markets and a steady CLTV decrease as the home becomes more expensive," said CoreLogic. "The pattern could be in part due to lower-priced entry-level homes being sold to buyers without established home equity to help with a down payment. Alternatively, it could be a result of higher-end homes being purchased by existing homeowners looking to trade up. After adjusting for changes in home price growth, there has been very little change in the average CLTV by price bucket except for a slight decline with higher-end sales. That said, any change in the overall average CLTV may provide initial insight into the buyer mix and risk tolerance of lenders."

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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