Early reports are showing first-time homebuyers coming back into the market. In fact, Freddie Mac's percentage of purchases of loans to these buyers hit a 10-year high in the first quarter of 2016 at over 40%. Over the last year, we funded homes for nearly 240,000 first-time homebuyers.
The responsible expansion of credit to these low- and moderate-income borrowers is making it easier to get approved for a mortgage. Our three percent down mortgage, Home Possible AdvantageSM, is definitely playing a role. Eighty-seven percent of our Home Possible Advantage purchases in March were loans to first-time homebuyers, the highest rate yet. While this is a niche mortgage product, it is helping creditworthy borrowers with limited down payment savings to purchase their first home.
But other factors are also at work, most notably low interest rates. Rates on a 30-year fixed rate mortgage averaged 3.61% for the week ending May 5. March's existing-home sales report, which shows monthly growth at 5.1%, suggests homebuyers are taking advantage of them.
We expect mortgage interest rates to stay well under 4% as we head into the heart of the spring homebuying season. We're predicting it to be the best one in 10 years, which should provide even greater opportunities for first-time homebuyers.
Want to receive our weekly blog round up? Subscribe at the right – and each Friday we'll send you our latest blog posts.