This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Rising Home Prices Pull 850,000 Borrowers Out of Deep Waters

NEW YORK ( TheStreet) -- Rising home prices helped 850,000 borrowers regain equity in their homes during the first quarter of 2013, according to the latest report from real estate analytics provider CoreLogic.

According to the report, 9.7 million properties or 19.8% of all properties with a mortgage still had "negative equity" at the end of the first quarter. That is down from 10.5 million or 21.7% of all residential properties with a mortgage at the end of the fourth quarter.

Rising home prices have helped pull 1.7 million back to shore during the past year.

A borrower is said to have negative equity if he owes more on his mortgage than what his house is currently worth. These borrowers are also referred to as "underwater" borrowers or "upside down" borrowers. Nationally borrowers owe $580 billion more than their properties are worth.

About 6 million borrowers hold first-liens without home equity loans. The average mortgage balance for this group of borrowers is $211,000. The average underwater amount is $48,000.

Another 3.7 million hold first and second liens. The average mortgage balance for this group of borrowers is $294,000.The average underwater amount is $79,000, according to the report.

The decline in underwater borrowers is good news for at least two reasons.

First, underwater borrowers have shown a higher propensity to default on their mortgages. The fact that underwater borrowers typically find it very difficult to refinance their loans into lower interest rates is one reason why they are likely to default.

The government's Home Affordable Refinance Program, which was recently extended till end of 2015, will increase refinancing opportunities for some underwater borrowers.

But for those with private mortgages, refinancing is more challenging and regaining equity in their homes gives borrowers an opportunity to capitalize on interest rates while they are still low.

The decline in underwater borrowers might also release pent-up supply and moderate price gains in fast-appreciating markets, according to CoreLogic economist Mark Fleming. This is of course good news for homebuyers who have been struggling to find homes amid unusually tight supply conditions.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $111.03 3.10%
FB $89.19 2.20%
GOOG $608.50 1.80%
YHOO $31.71 0.35%
TSLA $243.75 2.10%

Markets

Chart of I:DJI
DOW 16,265.29 +206.94 1.29%
S&P 500 1,937.37 +23.52 1.23%
NASDAQ 4,707.6020 +71.4970 1.54%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs