Almost five years after banks – burned by bad mortgages and the imploding housing market – clammed up on credit, lending conditions still remain tight, stunting further improvement in the housing market.
A housing recovery is under way and Federal Reserve Governor Elizabeth A. Duke thinks it will last, though perhaps without much more steam than it has already mustered. While investors have been responsible for much of the current demand, Duke believes it is essential that young first-time homebuyers return to the housing market moving forward.
As a member of the Federal Reserve Board of Governors, Duke is expected to analyze and speak about economic data as she did during a Mortgage Bankers Association conference recently in Avon, Colo.
Down payments are a big deal for most home buyers, whether they are first-timers or repeat purchasers. First-timers, in particular, often struggle to save enough for a down payment, while trying to understand how the size of their down payment can dictate the terms of their loan. The National Association of Realtors 2012 Profile of Home Buyers and Sellers , offers some new insight on how recent market conditions influenced down payments.
The survey found the median down payment for all homebuyers this year was 9 percent of the purchase price. The median for first-time buyers was 4 percent while the median for repeat purchasers was 13 percent.
For those ages 18 to 29, who make up approximately 1 in 6 Americans, things have changed. This group of young adults is delaying marriage and they’re waiting to have kids because many are saddled with debt and stuck in low-paying jobs (if they’re working at all).
Mortgage insurance, also known as private mortgage insurance or PMI, protects your mortgage lender in the case you default on your home loan. If you stop paying your mortgage and your lender is forced to take back the title on your property, mortgage insurance will reduce or even eliminate the risk of loss to the lender.
Mortgage insurance is paid by you, the borrower, in one of several ways, such as a monthly payment, an upfront premium or by paying a higher-than-market interest rate on the loan.
- Strict lending conditions
- High down-payment requirements
- A weak and unstable job market
While the economic data out this week couldn’t easily be characterized as “great”, the collective tenor of the available reports was arguably the most solid in some time, lending at least a little hope that we will not slide into recession as we close 2011.
This pulled some money out of hiding, and the stock market had a little better time of it for at least the time being. To the extent that things aren’t getting economically worse at the moment suggests that mortgage rates might stabilize at bit. After a small upward blip two weeks ago, mortgage rates sported a small downward blip last week (ending October 7). Read the rest of this entry »
First-time homebuyers are extremely important to this country’s housing market. The participation of this buying demographic is essential for housing to function properly.
However, just like many other potential buyers in the current marketplace, the influence of first-timers has been diminished. Read the rest of this entry »
When you read the results of the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, it’s easier to understand why September’s Pending Home Sales Index recorded its first decline since June.
For the first time in the Campbell/IMF survey’s history, cash became the number one source of financing for homebuyers. Recently, the FHA has been the predominant source of funding for buyers: Read the rest of this entry »
Update1: As we wrote yesterday, “This week could really give us a sense of homebuyer demand: both existing and new home sales reports are due to be released by week’s end.”
According to the National Association of Realtors (NAR), existing homes sales rose 6.8% last month, a direct result of the homebuyer tax credit’s pending expiration (emphasis added):
Buyers responding to the homebuyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of Realtors®.