The latest installment of FICO’s quarterly survey of risk managers at U.S. and Canadian banks shows real concern about a possible re-inflation of the real estate bubble. In the survey, 56% of respondents directly involved in mortgage lending expressed moderate to heavy concern that “an unsustainable real estate bubble is inflating.”
There are roughly six million homeowners in the U.S. still underwater on their mortgages. The average negative equity among those six million households is 33%. That level of negative equity won’t disappear anytime soon. However, home prices are soaring in many cities, and total homeowner equity in the U.S. is at its highest level since late 2007.
The survey also found that bankers are paying close attention to consumer debt as the re-leveraging trend continues. For the last two quarters, about 65% of our respondents said they think credit card balances are headed higher.