Here’s why this housing downturn is nothing like the last one

The once hot housing market is cooling off as mortgage rates rise. Home prices are historically high but there is concern that they will go down.

People are wondering if the housing market is in the same situation as it was a decade ago when the Great Recession hit.

America's housing market is in better shape than it has been in a long time. Thanks to the new lending regulations that resulted from that meltdown. Today's borrowers are much better off because of those rules.

The average borrower's credit score is a record high for first liens in America. In 2010 it was 699. Credit quality has been affected by the strict lending practices of the lender.

The price of a home has gone up due to demand over the last two years. Today's homeowners record the amount of home equity. According to Black Knight, tappable equity, which is the amount of cash a borrower can take out of their home while still leaving 20% equity on paper, hit a record high of $11 trillion this year. That is an increase from a year ago.

The amount of debt the homeowner has against the home's value has fallen.

The total amount of mortgage debt in the US is the lowest it has ever been. Negative equity is when a person owes more on a loan than the house is worth. More than one in four borrowers were under water in 2011. A small percentage of borrowers have less than 10% equity in their homes. Should home prices fall, all of this will provide a huge cushion.

About 8% of active mortgages are comprised of 2.5 million floating rate mortgages. It's the lowest volume on record. For terms of five, seven, or 10 years, there is a chance of a fix.

Just before the housing market crash, there were more than 13 million mortgage loans. The rules on those types of loans were changed after the housing crash.

More than 80% of today's originations operate under a fixed rate for the first seven to 10 years, as well as being underwritten to their fully index interest rate.

A “For Sale” outside a house in Hercules, California, US, on Tuesday, May 31, 2022. Homebuyers are facing a worsening affordability situation with mortgage rates hovering around the highest levels in more than a decade.

If the rates go up, the borrowers will have to make more payments. It is a risk. About 10 millionARMs were facing higher resets in 2007.

The percentage of mortgages past due is at a record low. The jump in delinquencies during the first year of the Pandemic is not as large as before. There are still 645,000 borrowers in theemic mortgage forbearance programs.

The mortgage market is doing well, according to the vice president of enterprise research at Black Knight. Millions of homeowners who took forbearance during the Pandemic have performed well since leaving their plans.

About 300,000 borrowers are still delinquent after exhausting forbearance programs. Even though mortgage delinquencies are historically low, they have been on the rise recently.

We will want to keep an eye on this group.

According to the Mortgage Bankers Association, mortgage credit availability is not as high as it was before the swine flu. Since rates began rising, lenders have lost half of their business, and that could mean they become more aggressive in lending to less creditworthy borrowers.

Home affordability is at a record low in 44 major markets according to Black Knight. Inventory is still half of its pre-pandemic level.

Danielle Hale said that rising inventory will eventually cool home price growth, but the double-digit pace has shown remarkable stick power so far. Those who remain in the market can expect less competitive conditions later in the year as higher housing costs begin to max out some buyers.