More home buyers using riskiest loans
Almost a third of U.S. home buyers chose the riskiest types of [tag]mortgage[/tag]s in 2005, as a record jump in prices drove affordability to its lowest point in more than two decades, according to a Harvard University study. The average [tag]mortgage payment[/tag] in 2005 rose to 24 percent of the U.S. median income after taxes, the highest since 1984, according to the report issued Tuesday by Harvard’s Joint Center for Housing Studies. Home prices rose 9.4 percent in 2005, the biggest annual gain in more than 40 years, the report said. Thirty percent of new mortgages last year allowed buyers to skip paying money toward principal, the report said.
Interest-only adjustable-rate mortgages that defer principal payments in the early years of the loan rose to 20 percent of the dollar value of all mortgages. Payment-option adjustable mortgages rose to 10 percent of mortgages. Both were rare two years ago, the study said.