Are Buyers in The Most Recent Years Actually Qualified?

[Alex Pettingill]

This is just a random though I had the other day. How many previously unqualified buyers before the pandemic, became qualified due to gov stimulus? We've all heard "Borrowers have never been more qualified" but why? Is it sustainable?  

Take this average hypothetical middle class couple for example, bringing home 80K a year combined. They are renters, both have student loans, both have financed vehicles, substantial consumer debt and no savings. Lets say they both have just over a 50% DTI ratio. The pandemic hits and their student loans are in forbearance, they use the money normally set aside each month for those to pay down their consumer debt.

A year has passed and now they are in a far better financial situation. They've payed off their consumer debt and have began saving, their credit scores rise a few points and break 700. This is all due to student loan forbearance, stop in leisure spending due to lockdowns and gov stimulus checks. They are now effectively a fairly well qualified buyer. They have a little saved up and purchase a home. 

The pandemic ends and the nightlife opens back up. Their credit cards begin to get used again. They decide that they should take advantage of low interest rates on a new vehicle. Student loans are now due for payment once again. Inflation is also on the rise for basic goods..... you finish the rest.

This is probably a pretty grim scenario. However I have seen quite a few people purchase homes that would not have been able to without pandemic factors. I'm talking people that live paycheck to paycheck. Drive new $45k vehicles, have the newest things and work very middle class jobs.

The question is; Did homeowners like this hypothetical one change their psychology on personal finance? Or will we see substantial amounts of foreclosure's in the next few years from pandemic buyers?