Homebuyer affordability is tight, but income not blamed for low sales

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Affordability remains a challenge for homebuyers, but barely any mortgage lenders attribute last year's sluggish home sales to insufficient consumer income or lack of loan products for new buyers, according to Fannie Mae's Mortgage Lender Sentiment Survey.

Only 2% of lenders report that a lack of consumer income was a driver in 2018 home sale declines, with another 2% claiming the absence of products tailored to new homeowners or low-to-moderate income buyers was to blame.

Instead, 48% of lenders point to low levels of home supply as the cause for last year's feeble home sales. About 24% said rising interest rates were to blame, and 20% cited high property values as the reason.

Increasing housing stock, offering consumer subsidies (like down payment or closing cost assistance) and offering more loan choices were among top suggestions by mortgage lenders to help improve affordability for low--to-moderate income families.

Lenders also said Fannie Mae and Freddie Mac could help tighten the affordability gap by offering grants and incentives to back affordable development, according to the survey. Other respondent suggestions included consolidating state and local down payment assistance programs and mortgage loans to fund renovations and special programs for first-time homebuyers, according to lenders.

In terms of the effectiveness of loan programs in assisting low-to-moderate income families, 44% of lenders rated low down payment programs among the most helpful, and 18% viewed mortgage loans covering renovation costs as beneficial.

Fannie Mae's fourth-quarter survey polled senior mortgage executives between Oct. 31 and Nov. 12, 2018.

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Housing market Purchase Housing affordability Housing inventory Home prices First time home buyers Mortgage rates Fannie Mae Freddie Mac
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