In October, Fred Watt, the director of the FHFA, announced that he plans to allow 3% down payment mortgages for the many financial institutions that Fannie and Freddie guarantee. He states that his intention is to include more minorities and people who had their savings wiped out by the Great Recession re-enter the housing market. This comes at a time when U.S. homeownership rate has fallen to 64.4% from 69.2% in 2004 as blacks, Hispanics, and first-time buyers struggle to qualify for loans. Is this just more huge mortgage mistakes about to happen all over again? Many think so.
Repeating the Same Mortgage Mistakes Again
Some financial industry executives and lawmakers, Republicans in particular, are calling Watt's move an irresponsible opening of credit floodgates that could contribute to the same mortgage mistakes made before, and another economic meltdown. The chairman of the House Financial Services Committee (Jeb Hensarling) stated that Watt's plan returns to the policies that originally caused the housing crash. He went on to say "an invitation by government for industry to return to slipshod and dangerous practices that caused the mortgage meltdown in the first place and wrecked our economy."
The CEO of home builder Toll Brothers, Douglas Yearley, a New York Stock Exchange traded company, called Watt's plan "a really dumb" idea. Paul Wallison, a former Treasury official under Ronald Reagan and currently at the American Enterprise Institute wrote an article critical of Watt's plan that was widely distributed, including being published by the Wall Street Journal. Part of Wallison's article stated, "Since the taxpayers are still standing behind Fannie and Freddie, it's clear who will have to pay the bill when these mortgage mistakes result in defaults in the future."
The director of Housing Finance Policy for the Urban Institute in Washington, Laurie Goodman, believes lowering the down payment requirement and keeping the other rules in place is a good first step in expanding the number of people qualifying for home loans.
One of the important rules that applies to low down payments is the requirement that borrowers obtain private mortgage insurance for any mortgage with less than a 20% down payment.
The goal is to ease lending to people with high credit scores but small savings accounts since credit scores are more important for staying current with a mortgage than the size of the down payment you made to get that mortgage.
What do you think? Is this heading in the direction of making the same mortgage mistakes again that thrust us into the recession in the first place? We'll keep you posted on the progress of this lowering of the down payment requirements.
Suffolk County NY housing is expected to strengthen along with the economy in 2015, according to Freddie Mac's U.S. Economic and Housing Market Outlook for November.
Frank Nothaft, Freddie Mac's chief economist, said recently that “the good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better.”
Predictions for Suffolk County NY Housing for 2015
Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent again. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of 2015.
Home prices: By the time 2014 wraps up in a few weeks, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers, according to Freddie economists. Historically speaking, that's moving from 'very high' levels of affordability to 'high' levels of affordability.
Housing starts: Homebuilding is expected to ramp up in the new year, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.
Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.
Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.
Consumers are more upbeat and businesses are more confident, all of which should lead to faster economic growth in 2015. And with that, the economy is expected to produce more and better-paying jobs, providing the financial wherewithal to support household formations and Suffolk County NY housing activity.
Stay tuned here, we'll update you as the calendar turns to 2015 on Suffolk County NY housing and the trends affecting the numbers for the new year.
Follow news on Suffolk County NY housing by periodically checking back in the Suffolk County NY Real Estate News section of our website under Suffolk County NY Real Estate Categories.
Don't forget to Find Us on Facebook and Follow us on Twitter!
With rents climbing faster than most American's paychecks, the latest trend in Suffolk County NY housing is finding a roommate to split the bills, and it isn't just for kids straight out of college anymore.
The percentage of adults living with someone other than a spouse or partner hit 32% nationwide in 2012, up from 26% in 2000, according to Zillow's analysis of the latest Census Bureau data.
Judging by the ongoing decline in homeownership rates and tightened supply of rental vacancies, the trend appears to be gaining momentum.
People start pairing up when rents are climbing and incomes aren't keeping up — and in recent years, rents have really been on a tear. They rose 6.5% over the 12 months ended in September, according to Trulia. Meanwhile, wages have remained more or less flat.
Benefits of Sharing Costs With Suffolk County NY Housing
Working adults in doubled up households tend to earn less, according to Zillow. So sharing their Suffolk County NY housing enables them to afford and compete for more attractive housing.
Many roommates enjoy not only the savings of splitting costs 50/50, but they also enjoy the companionship that comes with sharing their Suffolk County NY housing.
Renters who are willing to live together and share costs are also able to afford nicer places as opposed to footing the cost of everything themselves. The same holds true for some who decide to invest in Suffolk County NY housing by purchasing a home rather than renting. But buying a home together requires careful consideration, as well as legal advice. Co-owning Suffolk County NY housing can get complicated, much more so than just renting.
We have more articles concerning Suffolk County NY housing in the Suffolk County NY Real Estate section of articles, as well as additional home buying tips in the Suffolk County NY Home Buying Tips section, both under our Suffolk County NY Real Estate Categories to your right.
There are three common areas in your Suffolk County NY home where energy is probably being lost. These energy saving tips focus on entry doors, windows, and your attic access. These are the three most common problem areas.
You can correct and insulate problem areas by following these tips…