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.

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Source: AEI International Center on Housing Risk

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

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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.

5orlower

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

hprminc

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

15bucks

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

Ron_Swanson_Lagavulin

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