Just in case we needed more evidence that 2022 is not 2008 a new report from CoreLogic finds that piggyback lending during the pandemic actually fell and treaded mostly in the negative growth territory.
- From July 2020-June 2021, the number of piggybacked first mortgages declined 3.5% year-over-year while first-lien purchase mortgages jumped 19%.
- From July 2021-June 2022, piggybacks fell another 17.0% , the number of home-purchase mortgage origination only dipped 11.5% decline in the number of home-purchase mortgage origination.
NOTE: Prior to the COVID-19 pandemic, the growth trend in piggyback lending was robust and generally outpaced the growth of home financing.
Not 2008. Piggyback lending jumped to 9.5% in January 2008 before falling and settling between 4-5% for the last decade.
- While fewer borrowers used a piggyback loan, soaring home prices have led to a larger piggyback loan size. In June 2022, the median loan amount reached $12,500, up 12.5% from the same time one year ago but well below the $44,000 median the housing market saw in 2008.
Was this response to tighter lending standards? No. While lenders tightened credit standards in response to the pandemic, the credit availability to those who have approved the loans was not at all inhibited.
BOTTOM LINE: Either borrows all of sudden didn’t care as much about PMI or homeowners were sitting had a much healthier balance sheet and were able to put more money down.