Equifax introduces strengthened data for lenders… Inventory remains low but there is some hope says Trulia… American retirees owe more on their homes says Prudential…
Equifax introduces strengthened data for lenders
Mortgage lenders will now have access to 2 years of debt repayment and balance history from Equifax.
The credit agency has updated its Tri-Merge Credit Report for the first time in 30 years, effective Sept 24, 2016.
"For nearly three decades, mortgage lenders have used the same static formula to determine whether or not someone receives a home loan," said Craig Crabtree, general manager of Equifax Mortgage Services.
"Leveraging trended credit data to evaluate how borrowers actually manage and pay off their credit debt could have enormous potential in terms of opening up credit and providing many Americans with access to mortgage loans that they previously may not have qualified for," added Crabtree.
The update follows research from Fannie Mae which demonstrated that, all else being equal, borrowers who paid off their credit card debt every month are 60 percent less likely to become delinquent than borrowers who make only the monthly minimum payment.
Inventory remains low but there is some hope says Trulia
Home inventories continue to tighten in many areas across the US but there is some hope of a turnaround according to research from Trulia.
Overall inventory declined for the fifth straight quarter with the number of homes on the market this summer down 6.7 per cent from a year earlier. For first-time buyers there is even greater pressure with starter home inventory down 10.7 per cent. Trade-up home inventory was down 9.2 per cent.
However, there are signs of improving inventory in Florida and the West Coast. Twenty-one of the 100 markets assessed had increased inventory year-over-year with half of these in California and Florida.
"Nothing is permanent. Not even low inventory. With notoriously stingy markets like San Francisco, San Jose and Denver showing signs of picking up after prolonged periods of declining inventory, homebuyers in these markets are beginning to see a break in gridlock and should experience more choice in the months ahead," commented Trulia chief economist Ralph McLaughlin.
American retirees owe more on their homes says Prudential
Today’s retirees owe more on their homes at retirement than previous generations and may struggle to meet mortgage payments.
That’s the finding of research by Prudential Financial which warns that retirees could face issues such as forced sale of their home when the first spouse dies.
“It is a different world today for retirees,” said Jill Perlin, vice president, Advanced Marketing, Prudential Individual Life Insurance. “Americans are now carrying far more debt into retirement, particularly housing debt, and need to protect their families.”
Americans nearing, or in, retirement experienced an extraordinary increase in housing debt between 1989 and 2013, far outpacing the increase in home values, according to the Federal Reserve. For those ages 65 to 74, the median home value increased 76 per cent, while housing debt increased by 393 per cent.
Perlin said the higher level of debt is due in part to low interest rates, easy access to home equity credit lines and mortgage refinancing activity. “It is easy to accumulate debt and Americans are pretty comfortable with borrowing money,” she said.
Read more: What is the minimum credit score for a mortgage refinance?
As an insurance company, Prudential is keen to stress the ability of life insurance policies to provide enough income in retirement to cover the larger housing debts.
