Executive Perspectives Blog
Private mortgage insurance (PMI) plays an important role in the mortgage finance system because it makes homeownership possible when 20 percent down payments are an obstacle to otherwise qualified borrowers. The 2008 housing crisis underscored the importance of the mortgage industry to maintain a financially strong and resilient system that can provide consistent liquidity and broaden the access America's borrowers have to affordable mortgage credit in good times and bad.
If you're thinking about buying a home but unsure whether you could qualify for a mortgage or have enough cash for a down payment, you might be worrying too much. Yes, credit standards are higher now than they were a decade ago. But they actually are about the same as in the mid-1990s. Factor in today's very low interest rates and current home prices, and affordable mortgages are within reach for many qualified borrowers who may have been hesitant to enter the market.
This year may bring the best home sales since 2007, according to the industry’s leading prognosticators (including Freddie Mac). Even if short-term rates start going up, mortgage rates are expected to stay low and attractive to homebuyers and mortgage refinancers. That should mean many of our customers may see bigger mortgage volumes this year than in a long time.
There's a new reason Realtors and lenders may expect more qualified borrowers at the closing table during this spring's homebuying season. In addition to low mortgage rates and rising job growth, the down payment hurdle is starting to shrink for creditworthy borrowers, including first-time homebuyers and current homeowners who want to refinance. On March 23, Freddie Mac will start buying mortgages with down payments of only three percent – the first time down payments have been this low on Freddie Mac loans in nearly five years.
Having recently participated in the string of real estate industry conferences that herald each new year, what still echoes is all of the buzz about the strength of capital flows into commercial real estate, especially the multifamily market. Strong flows of both debt, in the form of mortgage loans, and equity, raised through investors, have created a market that is awash in liquidity. It was the talk of every event.