Millennial homebuyers struggling with down payments
Student debt affects the majority of young Americans.
As the nation’s largest living generation, millennials are seeking to invest in real estate, however, the challenge of saving for a down payment is a concern that affects a staggering proportion of young homebuyers.
In a recent conducted survey, conducted at the 2017 Mortgage Bankers Association Annual Convention and Expo, Genworth Mortgage Insurance surveyed 200 industry professionals and found that almost half (46%) believe the biggest obstacle for the first-time homebuyer market was saving enough money for a home loan. One third (35%) of professionals said a lack of affordable housing was the leading deterrent. We’ve previously reported on how the record-low housing supply crunch is keeping first-time homebuyers on the sidelines.
Industry professionals also recognised that many young Americans struggle with student debt. Given that the median student loan debt now exceeds $41,000, the majority (83%) of young people say they have delayed purchasing their first home because of their student debt.
Mortgage professionals surveyed in Genworth’s study also cited first-timers’ inability to qualify for a mortgage. The National Association of Realtors’ (NAR) 2017 Profile of Home Buyers and Sellers revealed a record-low level of housing supply and increasing price growth is restricting first-home buyers from entering the marketplace.
However, the majority (57%) of mortgage professionals believe that the first-time homebuyer segment will grow faster than the overall market in 2018, while less than one third (31%) see first-time buyers keeping pace with the rest of the market. A small proportion (12%) expect a slowdown in buying among the demographic.
Tech innovation is also removing some of the pressures placed on lenders. All generations of homebuyers are leveraging technology more than ever before to research home loans on their smartphones amidst a surge in non-bank lenders, not seen since the 2008 housing crisis flooded the market with competition.
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