Despite More 3% Down Programs, Share of Low-Downpayment Loans at 11-Year-Low

Despite More 3% Down Programs, Share of Low-Downpayment Loans at 11-Year-LowThe U.S. share of low-downpayment home loans requiring 3 percent or less up front has dropped to its lowest level during the last decade.
The finding by RealtyTrac, which  analyzed the size of down payments on nearly 20 million purchase loans for single family homes and condos nationwide from 2004 through 2014, was somewhat surprising.
Fannie Mae and Freddie Mac, the two mortgage finance giants that own most U.S. home loans, have been providing more low-downpayment opportunities for cash-strapped prospective buyers.
Moreover, the Obama Administration recently reduced the premiums charged by the Federal Housing Administration on mortgage insurance, which is usually required for Fannie-Freddie low-down loans.

In 2014, 25 percent of buyers using conventional or FHA loans put less than 3 percent down when purchasing a home, down from 27 percent in 2013.
That’s down from a peak of 46 percent in 2009, when a first-time homebuyer tax credit created a surge in purchases by first-time homebuyers, who are more likely to utilize low-downpayment loans.
RealtyTrac reports that the share of low-downpayment loans was at 37 percent in 2006 before the housing price bubble burst, dropping in 2007 and 2008 before jumping again in 2009.
Since 2009, the share of buyers using low down payments has dropped every year compared to the previous year.
The weighted average downpayment percentage has held steady between about 13 and 16 percent over the past decade. The average downpayment percentage reached an 11-year high of 15.6 percent in 2013, falling to 15.4 percent in 2014,.
The average downpayment percentage was at its 11-year low in 2009, when it was 12.9 percent.
(Click on chart below to enlarge.)

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