New 20 Percent Down Payment Makes Savers From Profligate U.S. Spenders

Bloomberg (07/16/08); Ivry, Bob
Experts note that Americans will save more and spend less as a result of the housing downturn, prompting lenders to institute 20-percent down payment requirements. Less than 1 percent of after-tax income is saved by the average household, but experts say families now must sock away 10 percent of their after-tax pay over a decade to afford a down payment. The housing market slump will push down mortgage originations by 53 percent in 2008 from 2006, reports Inside Mortgage Finance publisher Guy Cecala. Experts note that a drop in consumer spending is taking a toll on the national economy, hitting retailers the hardest.