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Friday, Jul. 17, 1998
Agency: Barriers to homebuying falling
Financing of a record $1.2 trillion in home mortgages is forecast in 1998
By PATRICIA LAMIELL
Associated PressNEW YORK - When Brian and Kerry Schneider moved to Phoenix last year, they thought they'd have to rent an apartment for at least two years to save up for a down payment on a house.
But when a local mortgage broker approached them in autumn with a deal to buy a home still under construction, they were able to make the move well ahead of schedule with a down payment of under $4,000.
Even as home ownership hits record highs in America, battalions of confident buyers like the Schneiders continue to stride forward as financing barriers collapse, according to a report released Thursday by Fannie Mae, the federally chartered mortgage financing company.
Obstacles to ownership such as high interest rates, hefty down payments, lack of job security and housing discrimination have crumbled, Fannie Mae said in releasing its annual housing survey.
(The Corpus Christi Board of Realtors has recorded 922 sales for the second quarter of 1998 compared with 864 during the same three-month period in 1997. In June, 299 houses were sold, up slightly from last year's 292.)
In May, the Schneiders closed on a three-bedroom home after putting down just 3 percent of a $127,800 mortgage in a special program run by Fannie Mae.
Their monthly payment of $980 is more than the $750 they were paying for rent, but the house is bigger, and ``it's much quieter than the apartment,'' Kerry Schneider said. Her main problem now is ridding the tiny front yard of gophers.
A record two-thirds of American households owned their own homes at the end of the first quarter, the most recent figures released by the U.S. Department of Housing and Urban Development.
In a sign that Americans believe home sales aren't even close to topping out, a Fannie Mae survey of more than 2006 families completed June 3 reported that 65 percent of adults believe now is a ``somewhat to very good time to buy a home.''
That is down from a high of 76 percent in 1994, when 30-year fixed interest rates were hovering around 8 percent.
Fixed rates on 30-year loans stood at 6.94 percent this week, up from a six-month low of 6.91 percent last week, according to the Federal Home Loan Mortgage Association. In the mid-1980s mortgage loan rates were in the mid-teens; in 1990, they were between 9.5 percent and 10 percent.
Housing economists predict that in 1998, a record $1.2 trillion worth of mortgages will be financed. That would be up from $835 billion in 1997 and break the previous record, set in 1993, of $1.05 trillion.
About 46 percent of the mortgages originated in 1998 will be refinancings by people taking advantage of the unusually low interest rates. But, that is still down from 55 percent in 1993, meaning that more mortgages are being written now for first-time homebuyers, said Fannie Mae economist David Berson.
The families that Fannie Mae surveyed this year expressed less concern than ever before when asked about specific barriers to buying a home.
For example, 60 percent of all renters surveyed said buying a home is very important or their No. 1 priority, the highest level found in the seven Fannie Mae national housing surveys fielded annually since 1992.
And 58 percent of renters said they were somewhat or totally confident that they could qualify for a mortgage, up from 52 percent who answered similarly in 1996, the last time that question was asked.
The confidence among potential homeowners is tied to several factors, Fannie Mae said, including low interest rates, affordable housing prices, confidence in their jobs, and belief that discrimination or social barriers are on the wane.
According to the National Association of Realtors, a person making the median family income last year had earnings that were 29.5 percent more than needed to qualify for purchasing a median-priced single family home. In 1990, the family with a median income had 9.5 percent more than needed. Median means half have more and half have less.
Affordability is important, Berson said, but ``what matters most for home sales is job creation, which was weak in the early 1990s and is strong now.''
The perception that housing discrimination is a major obstacle to home ownership fell to 6 percent of those surveyed in 1998, from 18 percent in 1996.
Although the downward trend is the same, those data differ significantly from an April survey by Fannie Mae of black and Hispanic households, in which 40 percent said they had experienced discrimination in mortgage lending, down from 59 percent in 1993.
``While still quite high, the progress indicated in these findings is significant,'' Fannie Mae said.
Results of the survey, conducted by the political survey research firms of Peter D. Hart and Robert Teeter, had a margin of error of plus or minus 3 percentage points.
Staff writer Jeffrey Tomich contributed to this report. He can be reached at 886-4316 or by e-mail at tomichj@scripps.comPost your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web