The U.S. has experienced a 5-year housing boom capped by record home-price growth since 2004 . . . . We know that housing booms don't last forever, and that rising interest rates will push debt service higher for borrowers relying on some of these emerging mortgage products. Credit losses are very low now, but mortgage lenders need to be prepared for higher losses.
In other words, be ready for the housing boom to become a housing bust. I previously blogged about the possibility that we are entering a housing bust a couple of weeks ago.