Banks stopped making real estate loans in 2021. Mortgage lending standards are at strictest levels in a decade. Is a full-scale real estate banking crisis upon us? And will that crisis turn the Housing Market Bubble into a Housing Market Crash?

Home prices in America have surged to record levels in mid-2021. At the same time, there is a record level of job losses and serious delinquencies across the country. The result is that banks and mortgage originators have become increasingly strict in making loans to home buyers and real estate investors.

Mortgage lending standards - tracked by the Mortgage Bankers Association - are now at their strictest level since 2013. That means that if you're a home buyer you need to have great credit score, good income, and no issues in your past in order to be approved for a mortgage. What's interesting is that banks are strict at a time when everyone else across the Housing Market seems to be bullish.

Why are banks strict? The first reason likely has to do with the Foreclosure Moratorium and the 1.7 million seriously delinquent loans sitting on bank balance sheets. From a bank's perspective there is a Housing Crash occurring, because the delinquencies on their books are at Housing Crash levels.

With so many delinquent loans and future foreclosures on the books, banks are understandably becoming more conservative about making new loans. And until banks are able to get these loans off their books, they are unlikely to become more aggressive in originating new mortgages.

The other issue is that banks likely believe the current Housing Market is in a Bubble. After all, a bank makes a loan at a percentage of the purchase price of a home. If they don't think the purchase prices in the market are justified, they will likely become more strict in making loans.

Once prices start going down, the transient demand in the Housing Market - flippers, speculators, Blackrock, Zillow, Hedge Funds - will likely look to sell all at once. After all, they are investing to make a profit. But who will be there to buy with so many Americans priced out of the market and banks unwilling to lend?

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0:00 Banks on Housing Market STRIKE?
1:43 Mortgage Availability Index: 2013 Levels
3:49 Banks think there's a Housing Crash?
7:03 Why are Banks not Lending?
9:33 Foreclosure Moratorium = Bad Loans
11:45 Banks KNOW it's a BUBBLE
14:37 Americans and Banks BOTH on STRIKE
16:05 Flippers / Speculators Propping the Market
17:30 Current Buyers: Have Realistic Expectations
19:15 Next Video: INFLATION v. DEFLATION?

#HousingCrash #BankingCrisis #MortgageLending

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