Residential Credit: Deleveraging and Regulatory Changes Provide Opportunity

November 30, 2019
  • Over the past 10 years, U.S. households have significantly de-levered and de-risked their balance sheets, standing in sharp contrast to the incremental leverage and risk added by U.S. corporate borrowers and the federal government.
  • Leverage in the housing system has declined significantly with the ratio of mortgage debt to GDP declining to 49% today from 74% in 2009. Mortgage debt to GDP is at its lowest since 3Q 2001.[1]
  • Housing fundamentals remain strong with vacancy rates at multi-decade lows driven by steady and above-trend demand for housing and a persistent undersupply of new housing.[2]
  • Limited credit availability post-crisis has restricted the expansion of mortgage debt as lenders have focused on originating qualified mortgages (“QM”).
  • Non-QM borrowers, which include self-employed borrowers or those with alternative incomes, expanded or near-prime credit borrowers with recent credit events, and investor loans to single-family rental owners, are especially underserved by the current regulatory framework.
  • We believe there is a growing opportunity for private capital to responsibly expand lending to these creditworthy borrowers that may increase based on proposed administrative mortgage finance reforms to reduce the government’s footprint in the mortgage market.

[1] Board of Governors of the Federal Reserve System, Household Debt Service and Financial Obligations Ratios.

[2] U.S. Census Bureau, Housing Vacancies and Homeownership Report, Table 8a, as of 2Q’19.


October 18, 2021

Pretium is a pioneer and long-term owner-operator in single-family rental housing, and invests heavily in its residents, homes and communities. Pretium’s industry-leading rental and financial assistance demonstrates unmatched commitment to keep residents in their homes.

To learn more, view our fact sheet.