We had the housing boom, with millions of risky mortgages made to shaky borrowers. Then we learned our lesson. Banks tightened lending standards. Congress passed financial reform legislation. What's the result? Today 60% of all new mortgages have down payments less than 5% of principal.
At the height of the boom, only 40% of new mortgages had such low down payments. What happened? Private lenders are now regulated, so they have to require more conservative underwriting. But the Federal Housing Administration has ballooned its lending and is planning on even more expansion in the coming years. This information comes from "How the Government is Creating Another Housing Bubble" by Peter Wallison and Edward Pinto of the American Enterprise Institute. (Hat tip to National Center for Policy Analysis's Daily Policy Digest.)