Jump in debt-to-income ratios not yet a concern
Fannie Mae’s announcement last August that it would accept mortgages with debt-to-income (DTI) ratios as high as 50% triggered a sharp rise in the share of high DTI mortgages. But we doubt that change poses a risk to the housing market. Other lending standards, such as credit scores, are still tight. And, absent a significant roll-back of mortgage lending regulations, the chance of a return to the ultra-loose lending environment of the mid-2000s is low.