Source: bizTimes —
In Philadelphia, about a third of owner-occupied homes were valued at less than $125,000 in 2021. But that year, only about 2% of mortgages made in the city were the type generally used to purchase properties in this segment of the market, according to an analysis by the Federal Reserve Bank of Philadelphia.
Mortgages valued at $100,000 or less — referred to as small-dollar mortgages by the Philadelphia Fed — can help aspiring homeowners with lower incomes access properties they can afford. But lenders made fewer of them between 2019 and 2021, according to the Philadelphia Fed’s report, released recently.
Researchers examined federal mortgage data to examine the small-dollar mortgage landscape in the region.
Why small-dollar mortgages are worth attention
The majority of borrowers who receive small-dollar mortgages in Pennsylvania — 75% — and New Jersey — 81% — have low or moderate incomes. These borrowers had median incomes of $42,000 in Pennsylvania and $47,000 in New Jersey.
“Small-dollar mortgages can help people with limited income or savings to purchase lower cost homes” and become homeowners when they otherwise couldn’t afford to do so, said Kyle DeMaria, coauthor of the report and a community development research associate at the Philadelphia Fed.
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