While new originations of mortgages with high loan-to-value ratios in recent years would push this share up, the substantial house price appreciation in that same period likely improved the financial positions of the households with high loan-to-value ratios in 2001. This relatively upbeat assessment of household credit quality seems to be shared by lenders and by investors in securities backed by consumer debt.
According to the Federal Reserve’s survey of senior loan officers, banks were in a relatively neutral stance, neither tightening nor easing on net, with respect to lending standards for consumer loans or mortgage loans through most of last year. Moreover, credit spreads on securities backed by auto loans and credit card receivables have narrowed in recent months.