Mortgage Payments Rise To 40% Of Consumer Incomes: A Five Year High

Tyler Durden's picture


Still think houses are extremely affordable? Still think rents, especially for rental stream-securitized offerings by Blackstone et al to widows and orphans , will continue rising in perpetuity? Think again. As the following chart from Bloomberg Brief shows, mortgage payments as a % of average consumer incomes has risen to 40%, up from the higher 20% as recently as a year ago, is still rising, and is now back to levels last seen in 2008.

Bloomberg has more:

The average monthly mortgage payment Mortgage Payments Now 40 Percent of Average Consumer Incomes for a new home in the U.S. rose by $300 between December and August, providing a potential red flag for U.S. Federal Reserve officials debating when to reduce their special asset purchases. The rise was due to a combination of rising home prices and mortgage rates.


In August an average monthly mortgage payment of $1,287.57 equates to about 40 percent of consumers’ average income, up from 31 percent in December, placing additional strain on household finances. While this jump is substantial, it is still far below the housing bubble peak of 65 percent registered in June 2006.

Yes, it can go higher. And it will. What is most ironic is that it desperately has to, at least according to boththe TBAC, Wall Street and the Treasury. Recall from the May TBAC presentation:

Simply stated, the Fed is desperate for housing to return to its status as a source of "high quality collateral", hence repoable credit money, instead of a byproduct of cheap credit affordable only to the 1%.  It is then and only then that the Fed can even consider to withdraw, and explains also why the Fed needs a housing bubble. After all, without the broader US population scrambling en masse into housing, there can by definition not be a bubble. Sadly for the Fed, the incipient housing bubble seems to have already popped, which is why a brand new concerted effort to make housing, paradoxically, less affordable and thus more disrable, is coming down the line, and why more and more people realize that Yellen's first flow adjustment will not be down but up.

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Mon, 11/11/2013 - 09:11 | 4142348 StychoKiller
StychoKiller's picture

I bang my head against the wall because it feels sooo good when I stop!

Mon, 11/11/2013 - 09:17 | 4142357 Headbanger
Headbanger's picture

Hey that's my line!

Mon, 11/11/2013 - 09:19 | 4142360 Ruffcut
Ruffcut's picture

Don't care who you are dat ain't a funny print. Peeps are house poor.

Mon, 11/11/2013 - 09:24 | 4142368 GetZeeGold
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Americans can afford it cause they're getting dumped off their healthcare.

No one is signing up for the new stuff cause it's wicked expensive.

Mon, 11/11/2013 - 10:08 | 4142401 hedgeless_horseman
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The average monthly mortgage payment Mortgage Payments Now 40 Percent of Average Consumer Incomes

I believe that is pre-tax income, ladies and gentlemen. IF you are maaking $100,000, then after fed income tax you are left with roughly $83,000. 

Subtract state income tax, property tax, and home-owner's insurance and you are left with ~ $75,000.  Now you are talking mortgage payments ~53% instead of 40%.

It is the land of the fee, home of the debt and tax slave.

Mon, 11/11/2013 - 10:09 | 4142446 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Who are these morons?  My PITI comes in at about 19% of my _NET_.  And costs less than rents on smaller properties, or even rents in multifamily buildings in my vicinity, let alone anyplace hip or urban..  Same property in LA or SF would probably be more like 80% of my net..

Mon, 11/11/2013 - 10:55 | 4142503 LawsofPhysics
LawsofPhysics's picture

"Who are these morons?"- Follow the fraud/theft/money and you can see that these morons/criminals live mostly in D.C., Jew York, California, and Illinois.   The great thing about the coming collapse, unlike those throughout history, is that the flow of money/capital/assets is now well documented and can be found easily online.  There is no question what locations in America have been benefitting from the ongoing fraud.  Yes, some of the cronies will get away, but with a little effort it will be easy to see how the guillotines need to be applied.

Hedge accordingly.

Mon, 11/11/2013 - 11:01 | 4142573 Dr. Richard Head
Dr. Richard Head's picture

Many morons are right next door.  My wife and I are sitting at 11.79% mortgage to income.  Most in my hood are pretty upfront about how much they make and their house payment.  I can tell you the 40% mark is pretty accurate for most around me.  I watch in awe as they scrape by day-to-day, but then have enough cash and time to party till 3-4 am on weekdays.  I guess one just needs to medicate themselves to get through the shit.  I know I do.

Mon, 11/11/2013 - 11:53 | 4142587 Shocker
Shocker's picture

Consumers are squeezed in every direction.

Mon, 11/11/2013 - 11:17 | 4142612 odatruf
odatruf's picture

Zero divided by anything is zero, so I guess whether I double or half my income, I'm an outlier.

Mon, 11/11/2013 - 11:21 | 4142623 new game
new game's picture

and then you look out and a new hundyi in the driveway-nice purchase neighbor(thinking what an idiot they are)...

Mon, 11/11/2013 - 14:19 | 4143086 corporatewhore
corporatewhore's picture

I get a warm and fuzzy feeling when someone talks that way

Mon, 11/11/2013 - 11:30 | 4142626 Jreb
Jreb's picture

Us too.

Mother in law doesn't understand why we don't live in a bigger house since we can "afford it". 

Told her "Debt bad - cash flow and hard assets good. House just place we live. Bedroom plenty big for bed. Ugh. Besides - jreb dumb."

She thinks I am a moron. I don't see her a lot as a result.

Lesson here is simple. Live in a smaller house and have lower stress, lower payments, lower overhead and fewer visits from your mother in law.


Mon, 11/11/2013 - 11:34 | 4142662 drdolittle
drdolittle's picture

Like the caveman/indian talk too.

Mon, 11/11/2013 - 11:36 | 4142673 Bearwagon
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I would add that your lesson is also applicable to cars ...

Mon, 11/11/2013 - 14:05 | 4143056 Buffalo Bones
Buffalo Bones's picture

The change in the definition of "affordability" creates so much cognitive dissonance it makes me nauseous. This is an excellent illustration of the saying "a country gets the leadership it deserves."

All we want is instant gratification, long term consequences be damned!

Mon, 11/11/2013 - 10:09 | 4142447 jbvtme
jbvtme's picture

Do you think the mother of the architect who designed this is proud of him today?

Mon, 11/11/2013 - 10:20 | 4142470 ItsDanger
ItsDanger's picture

No, that front door definitely stands out too much.  Windows everywhere except there.

Mon, 11/11/2013 - 09:30 | 4142379 Keyser
Keyser's picture

One of the greatest lies ever perpetrated against the American people is that home ownership equates to acheiving the American dream. Success perhaps for the bankers and government for reaping profits, but a potential nightmare for the typical home owner.

Mon, 11/11/2013 - 09:40 | 4142394 CheapBastard
CheapBastard's picture

Overpriced houses packed with 3.4% down Debt Slaves.

Mon, 11/11/2013 - 10:03 | 4142439 Headbanger
Headbanger's picture

Another one is "BMW, The Ultimate Driving Machine" 

C'mon, let's hear it from you Beeeeemrrrrr pukes!

Mon, 11/11/2013 - 11:24 | 4142634 new game
new game's picture

ultimate vanity money pit...

Mon, 11/11/2013 - 16:00 | 4143398 Buffalo Bones
Buffalo Bones's picture

'98 Camry, gonna ride that bitch till the wheels fall off.

Mon, 11/11/2013 - 12:18 | 4142787 gobsmack
gobsmack's picture

Ha! I am a beemer puke but I bought it before I realized what was happening to us and now wish I had bought gold and a ford focus instead.  Still living in our first house though with an $800/mo mortgage so still feeling reasonably ok on average.

Mon, 11/11/2013 - 13:28 | 4142966 robobbob
robobbob's picture

i spent a lifetime driving hoopties and can tell you bmw earned that slgoan. they are aaaaawesome. until its time to fix anything.

now its hard to keep the hooptey mobile going after cash4clunkers wiped out all the spare parts.

Mon, 11/11/2013 - 11:57 | 4142723 Freddie
Freddie's picture

Well you are realizing the American Dream for the govt unionized county workers sitting at desks all day doing nothing but counting the days till their golden pension.  Ditto the local unionized cops and unionized fireman lifting weights on your property taxes. 

Mon, 11/11/2013 - 14:25 | 4143106 Bob Sacamano
Bob Sacamano's picture

Whatever was "perpetrated against the American people" was only effective because they just happen to not be particularly smart.  Blaming someone else for borrowing money makes no sense -- no one was forced to borrow.   Folks just need to take responsibility not to do stupid things.

Mon, 11/11/2013 - 09:25 | 4142363 Indian_Goldsmith
Indian_Goldsmith's picture

Why Americans need so many new houses is beyond my comprehension. joint Indian families live in the same house for generations. Sometimes we have 4 generations living in the same house. Thats how we're able to accumulate so much GOLD. And it also make for a great extensive social support system, where kids are kept in line easily, and the old dont have to shell out their life savings into nursing homes(prisons for the old)

Mon, 11/11/2013 - 09:29 | 4142374 new game
new game's picture

cultural thingy...

couldn't live with mom, no thanks...

Mon, 11/11/2013 - 09:35 | 4142389 Indian_Goldsmith
Indian_Goldsmith's picture

True, Cultural thing here.

But i guess Americans cant have that - u know- a culture. You people dont show your women their place. You have women doing Men's responsibilities, and men shirking those responsibilities. But in our country, women know their place and stay out of the business of men. Women stay in the kitchen, where they belong.

Proper seperation of Roles. Not like the social anarchy you guys have

Mon, 11/11/2013 - 09:41 | 4142395 Bobbyrib
Bobbyrib's picture

Nice sock puppet..who are you really?

Mon, 11/11/2013 - 12:14 | 4142774 Bay of Pigs
Bay of Pigs's picture

That is funny.

Thanks Tyler, Sac or whoever.

Mon, 11/11/2013 - 09:44 | 4142398 fonzannoon
fonzannoon's picture

I thought India was big on all those honour killings?

I thought India was a total fucking mess. 

Mon, 11/11/2013 - 10:00 | 4142427 Indian_Goldsmith
Indian_Goldsmith's picture

Wow, you really beleive all that MSM crap?

Mon, 11/11/2013 - 10:52 | 4142550 new game
new game's picture

yea dad rules with an iron fist! on your knees bitch-cultural thingy...

Mon, 11/11/2013 - 09:46 | 4142400 pods
pods's picture

Gee thanks. That means alot from the country with the highest number of slaves.


Mon, 11/11/2013 - 09:49 | 4142407 fonzannoon
fonzannoon's picture

plenty of upvotes for that comment, and it comes from a guy representing the country that commits such awful crimes against women. Freaks on here this am.

Mon, 11/11/2013 - 09:52 | 4142414 Bobbyrib
Bobbyrib's picture

As opposed to every other morning?

Mon, 11/11/2013 - 10:06 | 4142442 Indian_Goldsmith
Indian_Goldsmith's picture

"commits such awful crimes against women"..You're another mindless MSM believing Drone, arent you? India worships women, We have goddess dedicated temples. A few families punishing wayward women and a few maniacs targeting little innocent girls doesnt really tell you anything about a country of 1.3 billion people, does it?

Mon, 11/11/2013 - 10:13 | 4142462 fonzannoon
fonzannoon's picture

MSM crap aside, because you may be right, I don't live there so I don't know.

To say that a woman's place is in the kitchen, and say that you worship women at the same time just confounds me. So please clarify something. If one of these women that you worship decides she wants to leave the kitchen and start a career etc. What would your culture's reaction be?

Mon, 11/11/2013 - 10:30 | 4142488 Bearwagon
Bearwagon's picture

Lighten up, Fonz. Didn't he clearly disqualify himself? I mean, come on, I am a few days older, and I know a little about cooking. I assert that every man who knows at least as much about cooking as I do would agree that a womans place is exactly not in the kitchen. :-)

Mon, 11/11/2013 - 10:32 | 4142495 fonzannoon
fonzannoon's picture

His avatar's shirt bought him one extra comment.

Mon, 11/11/2013 - 10:38 | 4142507 Bearwagon
Bearwagon's picture

I thought you would know me better ... this was NOT dedicated to him, avatar or not, but you. And by the way: Have you lost your sense of humor or wasn't that downvote from you?

Mon, 11/11/2013 - 10:41 | 4142519 RSloane
RSloane's picture

I'm going to take a guess and say "I-adore-women-as-long-as-they-stay-in-the-kitchen-and-do-exactly-as-I-tell-them-to-do" downvoted you.

Mon, 11/11/2013 - 10:48 | 4142544 fonzannoon
fonzannoon's picture

The women on my wife's side have ridiculous talents. They can design, sketch, build, write code....all sorts of shit. 

When tshtf and we get the great reset their talents and my ability to drink beers and yell at everyone that I saw this coming will be an awesome combination.

Mon, 11/11/2013 - 10:56 | 4142563 RSloane
RSloane's picture

OMG! That's my husband's plan too. :)

Off topic, but I read a follow up to the story you posted on Sunday. The guy was shot at the rink over his coat by a sixteen year old with an extensive rap sheet who then tweeted about the killing, both before and after. Get as far away from the city as possible Fonz. It may be your shoes, next.

Mon, 11/11/2013 - 11:03 | 4142578 fonzannoon
fonzannoon's picture

That was the thing RSloane. I don't go to the mall anymore. I never take my daughter into the city. Now I know the old timers on here will tell me the city was more dangerous years ago. Maybe. But nowadays the cops add a dynamic. When something happens now you have to run from the bad guy and run even faster from the cops who will just spray and pray.

It won't be me, because I won't put myself in that situation anymore. Think about it by the way. That shooting happened at 11pm and it was a 14yr old that got hit. When I was in Junior High I was not out at 11pm.

I am a bit frozen in place. I'm not in the city, but I am not in a great area should something serious go down. I need to reconcile this.

Mon, 11/11/2013 - 11:13 | 4142600 RSloane
RSloane's picture

Yes you do, Fonz. You are describing living in an area that has a lot of amenities that you can't take advantage of because its too dangerous. I didn't think about the time of night it occured, but you are right. In Baltimore, the nearest big city to me, gangs of girls as young as 8 are rushing into convenience stores and robbing them, taking everything their little arms can carry. They usually show up around 2 or 3 am. How can people not know their kids are out there at that time of night? I don't get how a 14 yr old is out at that time of night, either, let alone a 16 yr old who tweets his murder. Its so bizarre its difficult even to think about rationally.

Mon, 11/11/2013 - 11:20 | 4142621 fonzannoon
fonzannoon's picture

In parts of Brooklyn and the bronx these "families" just pop out one kid after the next to keep the checks coming. If the kid manages to survive to 16 it is not surprising that they end up killing someone else, themselves or both over something like wanting a jacket. 

This was the song Diblasio was introduced to.  NYC is totally fucked.

Mon, 11/11/2013 - 12:15 | 4142777 Hulk
Hulk's picture


"When tshtf and we get the great reset their talents and my ability to drink beers and yell at everyone that I saw this coming will be an awesome combination"

Best/funniest post eva !!!

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