
[dfads params='groups=165&limit=1']I expressed the view that new mortgage regulations will prevent future housing bubbles. These new qualified mortgage regulations forbade the measures lenders employed to inflate previous housing bubbles. One of these restrictions caps debt-to-income ratios at 43% of gross income. While this rule contains an interesting loophole (See: The 43% DTI cap strongly favors those with no consumer debt), this loophole fails to penetrate the rigid ceiling on affordability imposed by the 43% DTI cap on gross income and other ability-to-repay rules. If lenders are unable to find "innovative" ways of circumventing this cap, then future housing markets will be very interest rate sensitive. Small changes in a borrower's debt-to-income ratio make a huge difference in the amount financed…[READ MORE]