Prof: 1st-Timers Still Have Mortgage Choices

First-time homebuyers with low downpayments still have choices despite the tightening mortgage market, according to Susan M. Wachter, professor of real estate and finance at the University of Pennsylvania's Wharton School. With support from Genworth Financial Inc., Professor Wachter released her fourth-quarter 2007 U.S. Mortgage Payment Index, which evaluates mortgage products to see which ones offer the best value. The index shows that borrowers and lenders opted for safer mortgages in the latter part of 2007, with adjustable-rate mortgage applications dropping 39.6% from January 2007 to January 2008 while applications for fixed-rate loans rose 60.1%. "I am concerned that the wipeout of subprime lending may have a long-term negative impact on the credit market," Ms. Wachter said. "From an economic perspective, we need to find ways to keep the market moving, and first-time buyers are an important part of the equation. There are responsible ways to get these borrowers into homes, and they include traditional home financing, such as fixed-rate mortgages backed by private or government mortgage insurance." The index can be found online at http://www.genworth.com/mortgageinfo.