Debt Reduction Advice | Debt Reduction Advice

Across the country, the number of homeowners whose mortgages exceed the current value of their homes reached record heights.  At the end of June, more than a third of all the mortgaged houses in the U.S. held this status – called “underwater” by those in the mortgaging business.  This figure is also perhaps the highest it’s been in decades.

The string of job losses across the financial industry during the past year could affect property values and foreclosures.  There are places where mortgage debt is at reasonable levels; in states like New York, New Jersey, and Connecticut, for example.

The average loan-to-value ratio in New York is at roughly 56%.  New Jersey stands at 70% and Connecticut is at 63%.  In contrast to these percentages, the average loan-to-value ratio for the nation is 78%.

In the greater New York City area noted $183 billion in mortgages currently underwater, including Long Island, northern New Jersey, eastern Pennsylvania, but not Connecticut or New York State north of the city.

Other statistics highlight the concept that having an out of balance loan-to-ratio average also diminishes a borrower’s mobility.  To illustrate this fact, records from the Census Bureau showed fewer people moved in 2007 and 2008 than in any other two-year period since 1959 and 1960.  This translates into 19% fewer homeowners moved between 2007 and 2008.

Not only does it cause more owners to remain in place but the lower equity has caused many to save back more money since they can no longer depend on second mortgages in cases of emergency.

On average, most Americans saved less than 1% of income in 2006 based on estimates given by the Federal Reserve Bank of St. Louis.  The Federal Reserve has mentioned the fact recently that figures on personal savings have reached approximately 5%, the highest number in ten years.