I don’t see it as an on-off switch. The world of buyers can’t possibly divide neatly into one population of buyers who can afford traditional fixed rate 30-year mortgages and another population who can only afford IO/option ARMS/liar loans. I’d guess there are many people somewhere in between.
Does anyone know of any data that would help in understanding the number of buyers who can afford various levels of initial payment intermediate between fixed 30-year and IO/option/liar?
