April 01, 2015

No Foolin'

We're not the only ones who believe that a 3% down mortgage product will help boost sales this spring homebuying season.

According to a recent survey of mortgage originators by the National Association of Realtors, more than 71% of officers surveyed believe the move to a lower down payment will increase access to mortgage credit.

But while 3% down mortgage products will play an important role, broader access to credit will be driven by a confluence of factors says Freddie Mac deputy chief economist Len Kiefer.

Survey Mortgage Originators Graph - 3% Down
Click to enlarge

First, more certainty for lenders through the enhanced representation and warranty framework will help ease credit overlays and facilitate more lending. Second, reduced premiums by the Federal Housing Administration will help many prospective first-time homebuyers enter the market with a federally-insured loan. And finally, the continued rise in rents may push current renters to strike while the iron is hot (mortgage rates are low and home prices not too high) and purchase a home this year.

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