About The “Credit Is Too Tight” Meme (Freddie Mac Average LTV and DTI The Same In 2001 and 2013)

Logan Mohtashami did an interesting interview with David Lykken (not to be confused with the Lycans from the Underworld movie series). The title of the interview is “Slaying The Tight Lending Myth.”

Here is another piece to the puzzle.

Freddie Mac distributes their loans on line since 2000. So following my interview with Diana Olick on CNBC, I thought I would look at loan-to-value ratios and debt-to-income ratios from Q3 2001 and Q3 2013 (the latest quarter released to the public).

The results? The average loan-to-value (LTV) ratio is Q3 2001 was 75.91 percent. The average LTV in Q3 2013 was … 75.84 percent. Looks pretty similar to me!


How about average debt-to-income (DTI) ratio? 33.57 percent in 2001 and 33.63 percent in 2013. Once again, they look pretty similar to me!

Freddie Mac deals with conforming loans, not subprime loans. The Urban Institute report is decrying the lack of subprime lending!

The credit is too tight meme is way overblown. It’s really an “Income to too low” meme.

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