Loan Size & LTV Ratio

This chart provides an in-depth look at the mortgage origination dynamics, specifically focusing on the median loan size and loan-to-value (LTV) ratio of large bank consumer mortgages.

1. Original Loan Size (50th Percentile): This represents the median loan size for mortgages originated by large banks. Higher values can indicate increased borrowing or potentially rising housing prices.

2. Original Loan-to-Value (LTV) Ratio (50th Percentile): This captures the median LTV ratio for mortgages originated by large banks. The LTV ratio measures the loan amount as a percentage of the home's value. Higher ratios can suggest more borrowed money relative to the value of the home.

By comparing the median loan size and LTV ratio, the chart presents a detailed view of mortgage borrowing patterns and potential risk levels in the housing market.

Potential Interpretations:

Positive Scenario: If the median loan size is stable or growing moderately along with a steady or declining LTV ratio, it suggests borrowers are not overly extending themselves, which may indicate a healthy housing market.

Negative Scenario: If the median loan size and the LTV ratio are both rising significantly, this could signal an increase in borrowing risk. High LTV ratios might suggest borrowers are taking on loans that are large relative to the value of their homes, which could pose challenges if housing prices decline.