Welcome to the UtahREexpert.com Blog

2018-04-19 10:17:32
Is Mortgage Debt Out of Control?

 Family Mortgage Debt

Some Utah homeowners have recently done a “cash-out” refinance and have taken a portion of their increased equity from their house. Others have sold their homes and purchased more expensive homes with larger mortgages. At the same time, first-time buyers have become homeowners and now have mortgage payments for the first time.

These developments have caused concern that families might be reaching unsustainable levels of mortgage debt. Some are worried that we may be repeating a behavior that helped precipitate the housing crash ten years ago.

OK now to get nerdy with some numbers why...  It's actually pretty basic, and we want to assure everyone that this is not the case. Here is a graph created from data released by the Federal Reserve Board which shows the Household Debt Service Ratio for mortgages as a percentage of disposable personal income. The ratio is the total quarterly required mortgage payments divided by total quarterly disposable personal income. In other words, the percentage of spendable income people are using to pay their mortgage.

Family Mortgage Debt Graphic

Today’s ratio of 4.44% is nowhere near the ratio of 7.21% during the peak of the housing bubble and is instead at the lowest rate since 1980 (4.38%).

Bill McBride of Calculated Risk recently commented on the ratio:

“The Debt Service Ratio for mortgages is near the low for the last 38 years. This ratio increased rapidly during the housing bubble and continued to increase until 2007. With falling interest rates, and less mortgage debt, the mortgage ratio has declined significantly.”

Bottom Line

Many Utah and American families paid a heavy price because of questionable practices that led to last decade’s housing crash. It seems the American people have learned a lesson and are not repeating that same behavior regarding their mortgage debt.

 
 
Blog Archive
2019-04-05 09:15:09
Spring Home Maintenance Checklist

2019-03-25 16:26:24
20 Tips For Preparing Your House For Sale This Spring

2019-03-25 16:21:10
7 Things To Avoid After Applying for a Mortgage!

2019-02-21 13:03:05
3 Reasons Why We Are Not Heading Toward Another Housing Crash

2019-01-12 13:37:51
Is the Recent Dip in Interest Rates Here to Stay?

2018-11-05 17:14:45
5 Things to Keep in Mind When Buying Land

2018-08-17 09:20:18
7 Things You Didn't Know About Radon

2018-08-16 11:49:34
Gigantic Difference Between 2008 and 2018

2018-08-10 12:05:12
5 Things to Consider Before Starting a Master Bath Remodel

2018-07-06 11:42:03
Top 4 Home Renovations for Max Return

2018-06-19 11:10:06
5 Better House Painting Hacks

2018-05-03 13:15:02
4 Reasons Why Today's Housing Market is NOT 2006

2018-05-02 13:19:47
May is the Best Month to Sell Your Home

2018-05-01 08:13:33
Best Financial Advice When Saving to Buy a Home!

2018-04-19 10:17:32
Is Mortgage Debt Out of Control?

2018-04-17 13:02:43
Rising Home Prices Help Build Your Family's Wealth

2018-04-12 10:58:53
The COST of Your Next Home Will Be LESS Than Your Parent's Home

2018-04-09 11:29:16
Declutter to Improve Your Home's Marketability

2018-03-21 13:23:46
Home Safety Tips

2018-03-14 13:44:40
Gamer Home Upgrades

2018-03-07 14:01:20
7 Things to get Rid of Right Now

2018-02-28 14:51:28
Saving Money for a House

2018-02-21 12:27:01
Staging Tips

2018-02-14 13:58:39
Small Home Improvement Projects

2018-02-07 12:59:48
Tips for Buying a Home in Spring

Click here to see ALL articles.


Comment on this Article

Your Name:
Your Email:
Comments:
Verify:  Please enter the numbers shown to help eliminate spam.