It’s been well over a year since I’ve posted anything about deleveraging but this article in the NY Times over the weekend caught my eye. Deleveraging is a phenomenon we’re seeing across the US economy where households and corporations are paying down debt in the wake of the subprime crisis. Part of the reason for this is because lenders are not lending as aggressively anymore but as far as demand goes I’m also experiencing more and more applicants requesting shorter amortizations on their mortgages. Clearly from a psychological perspective consumers associate risk with debt.
The article talks about how more and more refinance consumers are taking 20-year mortgages instead of the standard 30 year mortgages.