High LTV Lending on the Rise: Black Knight

High loan-to-value ratio lending is gaining ground, spurred by the reintroduction 12 months ago of government-sponsored-enterprise-backed products that only require a 3% down payment, according to Black Knight Financial Services.

"High-LTV purchase mortgage originations are up 20% in the third quarter over last year," said Ben Graboske, senior vice president at the Jacksonville, Fla., mortgage data services company, in a Dec. 7 press release. "That's compared to an approximately 13% increase for the purchase market overall."

High-LTV products now represent 23% of all purchase originations, he added, noting that Federal Housing Administration-insured and Veterans Affairs-guaranteed loans have largely taken over the market. FHA cut its mortgage insurance premiums back in January, while VA offers a no-down-payment product.

In 2007, 45% of high-LTV originations were backed by GSEs. But since 2009, 90% have been backed by the FHA or VA.

Black Knight's Mortgage Monitor Report also found that home sales in the first 10 months rose 4% compared to the same period last year. Home prices have appreciated for 41 consecutive months leading to October. Colorado led the pack with a yearly price increase of 11%, while Missouri trailed as the only state with a drop in prices, down 1.9%.