Toll Brothers

I don't know if anyone follows Mortgage Bankers Association(MBA) reports. If not, you will find interesting what I am going to tell you.

According to the MBA residential data, mortgage delinquencies are spiking aggressively for FHA and VA loans. The delinquency rate for FHA loans is now 900 basis points higher than conventional loans. That is the widest spread we have seen since 2021. People who bought homes recently with tiny down payments are getting completely squeezed by inflation, property taxes, and insurance costs. They have zero equity cushion.

At the same time, prime borrowers sitting on 3% fixed mortgages are refusing to sell. This keeps inventory artificially tight and freezes the market.

My key takeaway: This forces a localized reset in normal real estate. As defaults pile up in the lower equity tiers, expect a wave of distressed property liquidations. Capital will aggressively abandon debt heavy residential REITs $VNQ and watch how homebuilders $XHB like $Toll Brothers(TOL.US) and $Lennar(LEN.US) navigate the split.

These are purely my thoughts.

$Toll Brothers(TOL.US) Double Beat ✅

EPS: $2.72 vs $2.60 est

REV: $2.531B vs $2.415B est

🟩 +0.90%