Why prevented impediments are still under pre-Pandemic levels
Shielding data
The graph below illustrates that shielding data showed little stress for many years prior to the start of COVID-19, and since then it has continued to perform well. Many years after cutting down, levels were abnormally low and we should have returned to pre-Pandemic level, even with prevention programs for executions.
Late cycle credit risk is always a factor in every economic cycle that we experience on the housing market. However, as shown below, the situation of the home credit in 2008 had already started to deteriorate years before the big recession started. The current state of housing credit seems to be much healthier compared to credit cards, car loans and debts of student loans.
Fico -Score data
The Fico score data for housing are impressive since the Qualified Mortgage Laws (QM) were implemented after 2010. The majority of people in the country obtain 30-year fixed loans, which offer stable debt costs. With rising wages, the cash flow has been stable for most homeowners for the past 14 years.
When I consider why the US has avoided a recession since 2010 (excluding the impact of COVID-19), I believe that the QM mortgage legislation and the Bankruptcy Act of 2005 have played an important role. These laws have helped to moderate the expansion of the household credit, so that consumers are used too much on a large scale. In this century they were really the unfortunate heroes of the American economy.
Conclusion
Although there are signs of credit stress in credit cards, car loans and now the fault of student loans that appear in delinquency -data, homeowners, at least on paper, seem to be in a stable position. Unfortunately, when the next recession takes place, tenant households will probably be the victim of the impact. On the other hand, homeowners not only tend to have strong credit scores, but they also have a considerable amount of equity in their homes.
We check all credit homes and new entries closely to keep everyone informed of possible home credit stress. During the years of bubble years we had nearly 15 million loans in delinquency, which meant that we were about to make many preventments happen and as house prices fell, a lot of home was lost. Now most homeowners have a lot of equity to sell and almost 40% of the houses in America do not even have a mortgage.
Currently, new mentions are again at normal levels, comparable to those we observed before Covid-19, where seasonal peaks varied from 80,000 to 110,000 a week. During the years of the bubble crash of the house, this index was between 250,000 and 400,000 lists per week for several years. Now that the credit markets have improved, we see no stress that is reflected in the data.
