Most mortgage industry executives believe first-time homebuyers will continue to have a strong share of the market, but they do express concerns about how they will afford the purchase.
Seventy-eight percent of mortgage industry executives surveyed believe the first-time homebuyer market share will stay where it is currently or increase by at least 3 percentage points, according to Genworth Mortgage Insurance’s recently-released survey results from 120 industry executives who attended the 2016 Mortgage Bankers Association Secondary Conference in New York City.
However, 64 percent of participants in the survey believe that the top issue preventing first-time homebuyers from a mortgage is the lack of a proper down payment, while 16 percent cite the lack of sufficient income as a reason why first-time homebuyers would be unable to obtain a mortgage. Nine percent said housing affordability was an issue, while 8 percent said poor credit scores. The lack of housing inventory and the high demand in today’s market is also a factor.
“Our industry, via this year’s survey data, acknowledges the first-time homebuyer’s rise as a key component of the homeownership mix,” said Rohit Gupta, President and CEO of Genworth Mortgage Insurance. “To support this demand, we must stay true to the great strides we have made in improving underwriting quality, making private capital available, and expanding the availability of prudent and affordable low down payment mortgages. Under these circumstances, it is important that all industry participants continue work to ensure we have an accessible, efficient, and innovative environment for new mortgage originations.”
Additionally, 49 percent of executives are concerned about the return of piggyback mortgages (80-10-10s), an increase of 11 percent more concerned compared to 2014. Of those who are concerned, nearly one-third believe that those signing up for these loans may not understand the full risks involved, while 18 percent feel borrowers run the risk of over-levering themselves, Genworth reported.
However, more than half, 51 percent, do not view piggybacks as a concern, and think that borrowers are responsible for their own decisions.
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