A report from the Federal Reserve Bank of New York indicates that while the household sector is still vulnerable to severe home-price declines, it has recently become less risky.
According to the report, equity in a borrower’s house played a key role in the Great Recession and the weak economic recovery that followed.
Prior to 2006, the Fed said that leverage was low. But household leverage rose rapidly through 2012 as home prices fell and unemployment soared.
Source: Mortgage Daily