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