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Banks were lending seven times annual earnings as of 2021. I have not seen updated numbers, but four times earnings is likely on the lower end of the average lo
by parkingrift 5y ago
Banks were lending seven times annual earnings as of 2021. I have not seen updated numbers, but four times earnings is likely on the lower end of the average loan to income ratio.
- rsynnott 5y agoWait, really? I didn't know it had gotten that bad again; those are subprime crisis sort of numbers.
- parkingrift 5y agoYes. However, it doesn't actually say much about affordability because interest rates drive such a large percentage of costs. A $285,000 mortgage (ignoring taxes+fees) would be $1,126/month at 2.5% APR but $1,618/month at 5.5%. If you use "conventional" lending standards a borrower with a household income of around $39k could qualify at 2.5%, but at 5.5% the income requirement would jump up to around $55k. The ratio drops from around 7.3 to 5.1. https://www.longtermtrends.net/home-price-median-annual-income-ratio/ https://www.longtermtrends.net/home-price-median-annual-inco...