They didn’t have to make mortgage payments, and could use the cash saved from those not-made mortgage payments for other stuff. Under the pandemic-era forbearance programs, homeowners that fell behind on their mortgage payments, or stopped making mortgage payments altogether, and then entered into a forbearance program, were reclassified to “current” instead of delinquent. They’re held by global bond funds, pension funds, insurance companies, etc.ĭelinquencies start trip back to reality.

A smaller portion of MBS are “private label” – not backed by government entities.

Here the taxpayer is on the hook, not investors and lenders.

Thousands of Credit Unions and other lenders also hold some mortgages on their balance sheets.īut most mortgages are now securitized into mortgage-backed securities. Mortgages is where the big systemic risks used to be due to the sheer size of the market and the high leverage.īut now, commercial Banks in the US only hold about $2.4 trillion of residential mortgages, including HELOCs, on their balance sheets, and those are spread among 4,300 commercial banks. “Other” (personal loans, etc.): $470 billion.Mortgages are by far the biggest part of consumer debt, bigger than ever. So I expect HELOC balances to rise further going forward because the cash-out refi game has changed. It’s better to leave the 3% mortgage alone, and get a $100,000 HELOC that charges 5% on the outstanding balance, if any. There is now a new dynamic in place: Much higher mortgage rates: It would be stupid to refinance a 3% mortgage with a 5% mortgage in order to draw $100,000 in cash out of the home. This has occurred as mortgage rates have spiked, and as cash-out refis have plunged. HELOC balances ticked up in Q2 to $319 billion, from the low in the prior quarter. As the Fed’s interest-rate repression and QE pushed down mortgage rates, and as home prices rose, folks began to cash-out-refinance their mortgages to generate cash, rather than drawing on HELOCs.īut now the decline has ended.

Home Equity Lines of Credit fell out of favor after 2009 and balances declined steadily, unwinding the massive surge of the years before the Financial Crisis. Over those 10 years, mortgage balances surged by $4.6 trillion, and over the past three years, mortgage balances surged by $2.0 trillion, or by 21%, to $11.4 trillion, according to data from the New York Fed’s Household Debt and Credit Report. Mortgage balances have surged relentlessly since the end of the Housing Bust in 2012. Mortgage balances in Q2 jumped by $210 billion from Q1, and by $945 billion, or by 9%, from a year ago, as prices spiked year-over-year, while people bought far fewer homes – sales of existing homes dropped by 10% from Q2 last year, and sales of new single-family houses plunged by 19% over the same period.

Dropkey price