At the beginning of May, Genworth Mortgage Insurance [1] conducted a survey of mortgage industry professionals to assess the reason for the decline in first-time homebuyers.
There were five main factors believed to be responsible for the drop in first time homebuyers. Out of the 150 people interviewed, 39 percent believe the largest obstacle for first time home buyers to overcome was the misunderstanding that a 20 percent down payment was necessary to secure a mortgage, even though obtaining mortgage insurance is a viable alternative to qualified buyers. Twenty-eight percent of the professionals interviewed believe the dwindling quantity of houses for sale is responsible for the decline. Other professionals believe that excessive student debt (27 percent) and rising interest rates (6 percent) are major factors in the falling number of first time home buyers.
Additionally, 41 percent of industry professionals believe that prospective consumers are of the belief that obtaining a home is more difficult if they are unable to provide the 20 percent down payment.
First time buyers are the primary driving force for the mortgage market, and quality education for potential consumers is the first step in rectifying this disparity, Rohit Gupta, CEO of Genworth Mortgage Insurance believes. “[M]any [first time home buyers] are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage. There are various low down payment options available today that allow prospective homebuyers to reach their dreams.” It is imperative, he continues, to be proactive in the dissemination of information to those that are not in the know.
In an industry that is ever-changing, companies will have to be vigilant in educating prospective borrowers on the various means in which they can obtain a mortgage, and a constant dialogue between industry professionals is vital to bridging that gap.