Credit quality

Late-payment rates are rising at nonbanks that lend to people with lower credit scores. "We're probably entering a stretch where you're going to see a separation between those that are relatively good underwriters and those that are not," one analyst said.

Only 0.9% of mortgage borrowers are currently at least 90 days delinquent. That figure could rise as high as 3.8% once pandemic-related deferrals lapse — still well below the 6% mark reached after the Great Recession, according to research by the New York Fed.

Kerry Killinger, former CEO of Washington Mutual, says the asset bubbles and increased consumer debt that contributed to his company's failure are reappearing.

Commercial real estate portfolios have held up better than expected during the pandemic. But rising delinquencies and fears of a delayed economic recovery are renewing questions about credit quality.

In November, more loan products were being offered both at the upper and lower ends of the market.

Lenders also increased jumbo product availability as well as rolling out new SOFR-indexed ARMs.

Lenders pushed back against the notion that city dwellers' pandemic-driven flight to suburbia would hurt them. They say fewer landlords have sought deferrals as vacancy rates remain low and rent collections have stabilized.

Deferrals may be hiding credit issues, leading lenders to track deposit flows, property maintenance and other factors to gauge the true health of their portfolios.

The government-sponsored enterprises set a Sept. 30 deadline for sellers to accept applications for Libor adjustable-rate mortgages.

Low rates and intense competition might lead some banks to ease underwriting standards in 2021, when the economy may not yet have recovered.