And it's not just Downpayments. Average Debt to Income Ratios today are comparable to mid-2000s.
Meaning that homebuyer incomes, on average, are just as stretched in their ability to afford the mortgage payments. pic.twitter.com/3wIVJvidCS
— Nick Gerli (@nickgerli1) August 14, 2022
But on average Mortgage Lending Standards are just as bad by the two most important metrics of Borrower ability to repay: Downpayment / DTI.
That suggests there will be lots of Foreclosures coming down the pike in 2022/23 as the Housing Crash and Recession play out.
— Nick Gerli (@nickgerli1) August 14, 2022
Note how over the last 50 Years relationship between Unemployment % and Default % on Mortgages is getting stronger.
Likely because of these deteriorating lending standards.
Now – we dodged a Foreclosure Wave in 2020 due to Government Intervention. pic.twitter.com/WbsHKCe1QH
— Nick Gerli (@nickgerli1) August 14, 2022
We're not going to be so lucky this time around. There's a huge backlog of Foreclosures from pandemic that will roll through in next year.
Expect that Blue Foreclosure line to spike and spike big time. pic.twitter.com/XYlJ189IDz
— Nick Gerli (@nickgerli1) August 14, 2022