by Calculated Risk on 2/16/2021 12:29:00 PM

In a 2005 post, I included a graph of household mortgage debt as a percent of GDP. Several readers asked if I could update the graph.

First, from February 2005 (16 years ago!):

The following chart shows household mortgage debt as a % of GDP. Although mortgage debt has been increasing for years, the last four years have seen a tremendous increase in debt. Last year alone mortgage debt increased close to $800 Billion - almost 7% of GDP. ...

Many homeowners have refinanced their homes, in essence using their homes as an ATM.

It wouldn't take a RE bust to impact the general economy. Just a slowdown in both volume (to impact employment) and in prices (to slow down borrowing) might push the general economy into recession. An actual bust, especially with all of the extensive sub-prime lending, might cause a serious problem.

CR Note: And a serious problem is what happened!

The second graph shows household mortgage debt as a percent of GDP through Q3 2020.   

The "bubble" is pretty obvious on this graph, and the sharp increase in mortgage debt was one of the warning signs.

The blip up in Q2 2020 was related to the collapse in GDP more than an increase in mortgage debt. With the recent house price increases, some people are worried about a new housing bubble - but mortgage debt isn't a concern (and lending standards are much better now then during the bubble).