Fannie and Freddie trying to make another housing bubble?

From The Wall Street Journal (link with pay wall) May 13: Fannie and Freddie Back More Mortgages of Those Deeply in Debt. The following quoted text is from the article.

"An increasing number of loans are going to borrowers with debt-to-income ratios of 43% or higher."

"Almost 30% of loans that mortgage giants Fannie Mae and Freddie Mac packaged into bonds last year went to home buyers whose total debt payments amounted to more than 43% of their incomes, according to an analysis by industry research group Inside Mortgage Finance. The share has nearly doubled since 2015."

"Some say cheap, federally backed financing has made credit available for millions of borrowers who otherwise might not have had a shot at homeownership. Others say that more-indebted borrowers are riskier, and that their purchases may be accentuating a rise in home prices that in many areas has outstripped median incomes."

Of course, there is more to judging default risk than a simple rule like total debt payments amounting to more than 43% of income. (It is still a worthy metric.) There are credit scores and what other cash needs and resources the borrower has. There is the purpose of the loan -- first time buyer, refinance, and refinance with cash out. Empirical studies show different default/foreclosure rates among them. (The three are ordered low to high.) Before the housing crisis that began in the 2000s, the debt to income limit (DTI) in practice for conventional fixed-rate loans was circa 35%. But I disagree with the first side. A lower DTI does not bar people from a shot at home-ownership. It only requires they buy a cheaper house they can better afford!

Of course, if defaults ensue, it won't be the Fannie and Freddie rule-makers who suffer the financial consequences of default. It will be the borrower, who is owed, and millions of others. I don't object to a private lender making riskier loans, but government support of it is “a horse of a different color.”