Monday, September 18, 2006

Nontraditional Mortgages Increasing

From the Wall Street Journal:

Use of Nontraditional Mortgages Is Edging Higher, Poll Indicates

Use of several types of nontraditional mortgages has increased among home buyers, according to a Wall Street Journal Online/Harris Interactive personal-finance poll.

The survey found increased usage of three of four types of nontraditional mortgages, which can be riskier for consumers than standard fixed-rate or adjustable-rate mortgages. The survey examined the mortgages used by people who had bought a home within the past three years.

The online poll of 2,790 adults found that 9% of recent home buyers obtained a payment option mortgage, compared with 4% in a survey conducted last year. These loans, also known as option ARMs, give borrowers as many as four payment choices each month, including a minimum payment set once a year, an interest-only payment, and what would be the standard payment on a 15-year or 30-year mortgage.

So-called piggyback mortgages, which combine a standard first mortgage with a home-equity loan or line of credit, were used by 12% of home buyers in the latest survey, up from 10% last year. And the share of home buyers using miss-a-payment mortgages edged up one percentage point to 3%. These loans let borrowers skip as many as two mortgage payments a year and 10 payments over the life of the loan with no impact on credit rating.

The overall use of interest-only mortgages fell to 14% in the latest poll from 17% last year. For homebuyers ages 18-34, though, the percentage rose to 23% this year from 16%, the poll showed.

At the same time, 15% of those who own homes said they had obtained a home-equity loan recently. Just over half of those said the purpose of the loan was to make home improvements, while 38% said it was to pay off credit-card debt and 11% said it was to help finance the purchase of a second home.

Of the 7% of Americans who said they currently own a second home, 40% said they bought it for use on weekends and vacations, according to the poll. Eighteen percent said they use their second home for rental income, while 17% said the second home was an investment and 15% said they would use the home in retirement.


Blogger grim said...

Thanks SG, opened a new thread on the NAHB numbers.


9/18/2006 12:25:00 PM  
Anonymous Anonymous said...

Shailesh Gala said...
Latest NAHB data

Great find.

Any RE pimps have anything to say?

I know I know RE will not go down more than 5% or will you change your tune and start saying 10% and when will you be saying 30%?

Ride it down to the bottom. Nosedive into the ground.

Buy and regret it.

9/18/2006 01:07:00 PM  
Anonymous Anonymous said...


Great find.

I guess those #'s would be reason to celebrate if they were your golf game, after the first 7.

BC Bob

9/18/2006 02:17:00 PM  

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