Mortgage debt back at 2008 levels


#1

Originally published at: https://boingboing.net/2018/03/21/mortgage-debt-back-at-2008-lev.html


#2

#3

Who holds the debt, though? That is an important part of the picture.


#4

Going to go out on a limb and say probably the same people that couldn’t be trusted with it before, or people that are exactly like them.


#5

And even more important what sort of dept. Higher dept goes along with the house buying spree after it was surpressed for so long. Sub prime vs sensible mortgages is a big factor.


#6

Not to worry. Since the Dodd-Frank act got rid of the TBTF banks, we’re good. Oh, wait…


#7

This illustrates something important about capitalism: when capitalism fails, the takeaway from the mistake is very rarely, “oh that was bad, let’s never do that again” but more often, “well how can we get away with it next time?”

And if you thought it was bad the last time, the crop of people presently in control of things are considerably more vile and amoral than the people in control of things the last time. You can be assured that the fallout will be considerably worse, provided anyone is left to experience it.


#8

Well it course! We’re all borrowing more because we’re all so optimistic about the day, coming soon, when we get tired of all the winning!


#9

Sure, this number, by itself, doesn’t necessarily tell you much about the health of the housing market except that a) nominal prices have gone up since the bottom of the crash, and b) people are getting mortgages to cover it. Neither of those things are intrinsically surprising. You also need to look at equity (and borrowing against the equity), price-to-income-ratios, price-to-rent, speculative investment (flipping), and other factors to figure out if there’s really a bubble.

I don’t think the market is as bad now as it was ten years ago. It is worrying that Wall Street is having some success at loosening the few constraints that were put in place after the last collapse.


#10

Economic recovery complete!


#11

Great. and we were about to seek to get a construction refi to remodel our house.


#12

Lesson learned from previous housing bubble: If you are in the market to buy a home now, wait until after the crash to buy.

Save your money kids.


#13

The majority of loans between the great recession and the fed’s first rate hike last year were refinances. People took advantage of all-time low rates. It’s only recently that purchase volume has begun to take off - and home construction has not kept up with demand. If there’s a weakness in this curve at all, it is with first-time homebuyers.

@Ceran_Swicegood, I’m with you on this one. Lenders are just not doing LTV’s much above 80% these days.


#14

That’s basically what we did the last time. As the saying goes: the market can remain irrational longer than you can remain solvent, so be careful out there. Also: even if there is not another bubble on a national scale, it doesn’t mean your local market may not be overheated. Localized bubbles have happened in many places over the years.


#15

We learn nothing because This Time It Will Be Different.


#16

2008 debt = bad. 2018 debt = not as bad.


#17

Really? B/c I bought in 2014 at 3.75% interest, 30 yrs, with only 5% down (PMI went away after 2 years b/c of how much local housing prices went up, and wasn’t much in any case). Best financial decision I could have made at the time. My housing expenses now are $600/month less than when I rented 4 years ago, and I’ve built up a lot of equity. I realize this is not most first time buyers’ experience, but I wasn’t aware the mortgage market had changed that much.

Also - that uptick in total debt (which I assume is outstanding total principle?) started at a time when rates were really low, compared to 2008 (today is still much lower than a decade ago). How much of that was new mortgages, versus cash-out refinances at lower rates but similar monthly payments?


#18

@beschizza

Nope. Fixed that for you:

All dollar amounts adjusted to February 2018 US dollars using quarterly average CPI All Urban Consumers.

You are welcome.

PS I notice that (1) we are about where we were in 2005 and 2011, and (2) that the rate of growth in adjusted dollars since 2014 has been much slower than the growth leading up to the crash. I am not an economist or financial market analyst, but bubble-burst crashes tend to look like unprecedented steep growth followed by a cliff-like drop.


#19

I analyze mortgage data for a living. It’s just last year that the majority of mortgages flipped from refi to purchase. Most of the refi’s at the beginning of the recession were no-cash-out in order to take advantage of federal programs. Cash out increased slowly between then and now. And overall volume has been going down.

With 5% down, was it an FHA or VA loan you obtained? That market is slightly different from conforming - typically 20% down with some affordable and first-time exceptions.

It would be interesting to know exactly what “total debt” is included in the graph - 1st liens only (purchase and refi)? Or 1st liens plus all Home Equity loans?


#20

I think they simply used the “All Holders” figure from the Fed.