A new consumer survey finds nearly half of potential homebuyers are sitting out this season out of fear of today’s tighter mortgage credit conditions.
According to survey results released Tuesday by independent home lender loanDepot, 56 percent of Americans who don’t currently own a home but would like to purchase in the near future say they’re not pursuing it right now “because they fear they won’t qualify for a loan.” Among current homeowners who wish to re-enter the market, 30 percent hold the same fear.
Furthermore, just fewer than three-quarters of Americans who fear they won’t qualify admitted they haven’t actually taken any steps to find out.
“We’re well into this year’s home buying season and too many potential buyers and sellers are sitting on the sidelines because they’re afraid they can’t qualify for a home loan before they’ve looked into it,” said Dave Norris, president and COO for loanDepot, adding that room is slowly opening up in today’s market for borrowers with less than stellar credit. “Potential buyers are forfeiting their dreams of homeownership before they find out what financing options are available to them.”
That fear was more concentrated among first-time homebuyers, many of whom fit into the 25–34 “Millennial” age bracket.
“Our loanDepot survey confirms uncertainty and confusion about qualifying for a loan are driving more young potential buyers away from homeownership than any other age group. However, their uncertainties and fears may be much worse than reality. Growing the first-time homebuyer market share may be as simple as going online and exploring the options,” Norris said.
Out of those not pursuing a loan due to qualification concerns, 53 percent said they think it’s harder to get a loan today than it was last year—however, according to monthly data released by Ellie Mae, credit standards have actually loosened compared to a year ago, with the approval rate of mortgage applications rising nearly 3 percentage points year-over-year in March to 58 percent.