The housing market has cooled off a bit after an incredibly hot stretch fueled by the pandemic. That doesn’t mean it’s about to be 2007 all over again.
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Total mortgage debt in the United States is now less than 43% of current home values, the lowest on record. Negative equity, which is when a borrower owes more on the loan than the home is worth, is virtually nonexistent. Compare that to the more than 1 in 4 borrowers who were under water in 2011. Just 2.5% of borrowers have less than 10% equity in their homes. All of this provides a huge cushion should home prices actually fall.There are currently 2.
ARMs today are not only underwritten to their fully indexed interest rate, but more than 80% of today's ARM originations also operate under a fixed rate for the first seven to 10 years. "The mortgage market is on very historically strong footing," said Andy Walden, vice president of enterprise research at Black Knight."Even the millions of homeowners who availed themselves of forbearance during the pandemic have by and large been performing well since leaving their plans."