So I work as a housing counselor, trying to help first time home buyers purchase homes. This last year I’ve been seeing ridiculously high mortgage payments clients getting approved for. Well above the standard 30% Housing Ratio, 44% DTIv ratios conventional mortgages demand. Speaking with a lender today, turns out Freddie/Fannie have really relaxed guidelines around Housing Ratio. So people are getting conventional loans with up to 50% Housing Ratio! (Which means 1/2 of someone’s Gross monthly income is going to their Mortgage). This reminds me so much of pre -2008. These loans are totally unaffordable. I’ve seen clients making less than me taking on payments $1,000 more than my Mortgage. And I’m not wealthy or crushing it by any means. Bottom line- there’s going to be massive foreclosure rates coming in the next 1-5 years. Not sure how best to play it at this time though.
I’m talking about 50% housing ratio and 60% DTI. Which was not common at all until interest rates rose. From what I’ve been seeing, virtually every first time home buyer who’s purchased in the last 2 years has a loan that’s risky AF and unaffordable. The smallest financial shock can cause people to struggle making their payment. Hence we’ve seen a 2,000% Increase in mortgage assistance requests. Which has been fine as we’ve had $$ to help pay people’s mortgages. That money is all spent up now…