More than a decade after the housing crisis, homeowners – and the housing industry as a whole – are back on their feet, with collective home equity now surpassing its pre-recession peak.
According to recent research from Lending Tree, 10-plus years of government financial intercession, low interest rates, more stringent lending standards and an overall conservative approach from homeowners and real estate consumers has helped put the housing industry back on track. Although the 2019 64-percent homeownership rate marks a decline of more than 4 percentage points since prior to the recession, the following statistics paint a vastly improved picture:
- An increase in the value of mortgage-backed securities held by the Federal Reserve over the past decade has brought liquidity to the market and helped keep mortgage rates low since the Great Recession. To be exact, at the start of the decade, the value was $909 billion; by the end of the decade, it was $1.4 trillion.
- Mortgage rates remain historically low, with borrowing becoming increasingly less expensive over the course of the decade. The average rate for a 30-year, fixed-rate mortgage landed at 3.74 percent by the end of the decade, more than a point lower than the average rate of 5.09 percent when the decade started.
- At the height of the recession, mortgage delinquency rates reached as high as 11.5 percent. By 2019, the delinquency rate fell to 2.45 percent, the lowest level in a decade.
- By 2019, homeowners were spending 4.1 percent of their annual household income on mortgage payments, the lowest percentage since the Fed began tracking this data in 1980.
- An important result of the housing crisis has been a tightening of mortgage-lending standards, preventing unqualified borrowers from getting into trouble with unsustainable loans. As of 2019, only 8 percent of mortgages went to subprime borrowers, a stark contrast to the pre-crisis 20 percent.
- Home equity has risen considerably over the last decade. Since its low point of $8.2 trillion in 2012, the value of home equity surpassed its pre-crisis peak at $14.4 trillion and rose to $18.7 trillion in 2019.
