Big Short Redux? Non-Bank And Low Downpayment Mortgages Soaring Again

The ending of the film “The Big Short” has an ominous message that nothing has changed since the financial crisis in 2008-2009. While some things haven’t changed, the big (or too-big-to-fail) bank share of mortgage originations has plummeted while non-banks are taking over.

Source: AEI International Center on Housing Risk

The change in origination share is particularly felt by FHA and Ginnie Mae.

Source: AEI International Center on Housing Risk

When combined with this chart of 5% and under down payment share, we see a pattern of non-banks contributing a large percentage of low down payment loans.


Let’s hope with all these low down payment loans being origination that home prices and family incomes don’t decline.


Am I optimistic? Well, more and more people are drinking $15-19.99 bottles of wine signalling optimism.


I will be even more optimistic if everyone starts drinking $60 bottles of Lagavulin like Park and Recreation’s Ron Swanson.


David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.

Get Access