The homeownership rate in the U.S. is now over 69 percent (chart 58). According to the American Housing Survey, of these homeowners, approximately 35 percent own their home free and clear. Another 51 percent have a fixed-rate mortgage. These 86 percent of owners benefit from house price increases and would not be affected, in terms of their mortgage payment, by an increase in interest rates.
Of the remaining homeowners, a significant number hold jumbo mortgages, indicating that they have an appreciable level of income and wealth. Another group of ARM borrowers have been in their loans for years, and their mortgage payment behavior is known. There is only a small percentage of borrowers that are potentially vulnerable to an increase in rates or other economic shock. This overall position and reassuring macro context needs to be kept in mind when determining the potential impact of the several risk factors discussed within this study. There is no suggestion that we live in a brave new world immune from risk or the possibility of a downturn.
There are a number of risk factors that should be continuously monitored. However, the appropriate stance is one of caution, not of panic. It is important that policymakers and others recognize the fundamentals that are driving the housing market. We need to understand the benefits that can be derived from innovations in the mortgage market. And, we need to identify the mitigating factors that are present in today’s mortgage and financial markets that would prevent a regional downturn or other localized decline from creating a more widespread problem.
In this report, the MBA is downplaying the risks associated with the housing bubble. They admit there are risks and a possibility of 'localized decline' but that the would not be a 'more widespread problem.' Basically, they are saying that there maybe small price declines in certain areas or regions but that widespread price declines will not occur.
Or simply put: "Don't worry be happy" and "No need for government regulation" and "Let the good times roll"