Housing Cost To Income Ratio

Decent Essays
Our research has revealed in 1940 the U.S. Census Bureau recorded the median price of a single family home in the U.S. was approximately $2,938. The median yearly income was $1,730. The Housing Cost to Income ratio (HCTI) was just over 2:1. Most borrowers during this period kept their mortgages for 30-years. During the 1970s borrowers began to exhibit major behavioral changes by ceasing to keep their mortgages until full term (the average being 10 years) while their HCTI ratios ballooned to over 5:1. As a consequence of this trend, lenders and MBS investors are resigned to investing 30 years worth of capital for only 10 years of accrued interest. Revenue streams derived from MBS are all too often dependent on borrowers that have an average
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