Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Source: Federal Reserve Bank of Boston


An Inman News story (subscription) covered the release of a new study of the relationship of default rates and housing appreciation:

House price appreciation plays “a dominant role” in generating foreclosures, according to a study released today by the Federal Reserve Bank of Boston, “Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures.

The idea that lower rates of appreciation in a market would lead to higher default rates as borrowers are unable to refinance their way out of trouble.

The study, of the Massachusetts housing market from 1989 to 2007, found homes originally purchased with a subprime purchase mortgage ended up in foreclosure about 18 percent of the time, or more than six times as often as those purchased with prime purchase mortgages

About 30 percent of foreclosures in the state during 2006 and 2007 were traced to homeowners who used a subprime mortgage to purchase their house.

A higher percentage — almost 44 percent of foreclosures — were on homes whose last mortgage was originated by a subprime lender. About six out of 10 of those borrowers had originally purchased their home with a prime mortgage, and then refinanced into a subprime mortgage.


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4 Responses to “[Getting Graphic] Not Able To Appreciate Their Defaults”

  1. Just me says:

    wowwww great representation!!!

  2. Peter T says:

    “A higher percentage — almost 44 percent of foreclosures — were on homes whose last mortgage was originated by a subprime lender. About six out of 10 of those borrowers had originally purchased their home with a prime mortgage, and then refinanced into a subprime mortgage.”

    I hadn’t heard this before, but it isn’t surprising. I remember one couple I dealt with who had gotten over their head in debt, refinanced to consolidate, and claimed that this was a life saver and they had learned their lesson. I got a call less than 6 months later and they were back in the same situation, but with less equity. Home appreciation was a great enabler.

  3. Madison Albright says:

    I indeed agree, very good representation!

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