Do looser mortgage terms signal a banner year for real estate in 2015 and beyond?
Over the last two months, Fannie Mae and Freddie Mac have made changes to their loan guidelines aimed at loosening the mortgage market by lowering the down payment requirements to 3 percent. On Jan. 26 the Federal Housing Administration paired that move with a reduction to the mortgage insurance premiums tied to FHA-based loans.
Thanks to these moves 40 percent of mortgage investors have begun to offer versions of the low-down-payment mortgage which is officially scheduled to begin next month.
Those rule changes appear to already be having an effect; two weeks ago mortgage applications for FHA-based loans were 9.1 percent of all applications and last week they were 13.1 percent.
The moves could finally allow Millennials to enter the housing market in large numbers. Their conspicuous absence in the market has been tied in numerous reports to a lack of cash on hand for down payments.