Survey Says, Home Affordability a Top Concern

Increasing the supply of housing stock is the key to making housing affordable to a larger population of homebuyers, according to the lenders who responded to Fannie Mae's Mortgage Lender Sentiment Survey for the fourth quarter of 2018. Some of the other ideas put forth by them included offering consumer subsidies as well as more loan choices such as mortgages involving low down payments or loans including renovation costs.

According to Fannie Mae, home affordability continues to be a challenge across the country with rising interest rates and continued home price appreciation discouraging both first-time and move-up homebuyers. As a result, through its quarterly lender sentiment survey, Fannie Mae asked senior mortgage executives their views on improving housing affordability for low- and moderate-income homebuyers.

The survey revealed that while 48 percent attributed the slow growth of home sales to an insufficient supply of homes available for sale, they rarely attributed the slow growth to tight credit underwriting standards or lack of mortgage products for first-time low- and moderate-income buyers.

Apart from increasing housing supply, some of the other ways that lenders thought would help more low- and moderate-income households achieve their dream of homeownership included improving consumer readiness for owning a home that would help make housing more affordable for low- and moderate-income homebuyers (11 percent) and offering a wider array of loan products (10 percent). Other approaches, such as lowering the total cost of homeownership or offering education or job training to raise income levels, were each selected by 8 percent and 6 percent of lenders, respectively.

"In the face of the perceived impacts of non-mortgage supply constraints, it appears that further easing of consumer credit standards would be more likely to contribute to stronger home price appreciation than expanding sustainable homeownership," said Mark Palim, VP and Deputy Chief Economist at Fannie Mae in his Perspectives blog.

Additionally, Palim said Fannie Mae's research indicated that an "inadequate level of new housing construction relative to growth and underlying demand has contributed to strong home price appreciation and ongoing affordability challenges for first-time and move-up homebuyers."

For Q4 2018, a total of 239 senior executives completed the survey during October 31-November 12, representing 212 lending institutions.

Click here to read the full survey.