several key developments late last year that will likely result in more first-time buyers and other house hunters in the market in 2015
Chicago, IL (PRWEB) March 04, 2015
Despite concerns that harsh weather could lower buyer demand, pending home sales in January reached their highest level since August 2013, the National Association of Realtors reported. The NAR's pending home index pointed to upward growth in contract signings, increasing 1.7 percent to 104.2 in January from the previous month. The Federal Savings Bank was pleased to read that not only did growth in pending home sales continue in 2015, it's a huge improvement from the same period last year, jumping 8.4 percent from January 2014.
NAR Chief Economist Lawrence Yun noted several key determinants, such as lending restrictions that could open up the housing market to more buyers in 2015, that contributed to this rise from last year, such as lenders loosening restrictions for certain buyers, which could open the housing market to more buyers in 2015.
"Contract activity is convincingly up compared to a year ago despite comparable inventory levels," Yun said. "The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth."
Changes in lending could boost housing sales
While buyers in 2014 may have faced low inventory, which increased home prices and closed some buyers out of the market, there were several key developments late last year that will likely result in more first-time buyers and other house hunters in the market in 2015. In December 2014, Fannie Mae and Freddie Mac announced they would accept down payments as low as 3 percent on mortgages, CNN Money reported. This figure is lower than the 3.5 percent the U.S. Federal Housing Administration accepts.
Fannie Mae began accepting fixed-rate loans with lower down payments Dec. 13, according to CNN Money. Freddie Mac will begin these loans also with the reduced down payment requirement by March 23. To qualify for the more affordable mortgage, buyers will have to purchase private mortgage insurance as well as fulfill certain credit requirements, including achieving a credit score of 620 and up. As the job market adds positions and workers' wages increase, consumers will be more likely to afford these loans.
Housing affordability to improve in 2015
As a result of more job and financial security, housing affordability is also becoming less of a concern for buyers in 2015, as it has become less costly to borrow from lenders. The FHA said it will reduce its mortgage insurance premiums, which lower borrowing costs for buyers and could save them thousands each year, USA Today reported.
In addition to the smaller borrowing costs, interest rates are still near historical lows, which also lower borrowing costs over the life of the loan. As consumers work to increase their credit scores through making payments on time and handling their credit obligations responsibility, they can improve their chances of mortgage approval. Home buyers with excellent credit have the opportunity to lower their monthly payments if they buy homes this year and lock in one of the lowest mortgage rates now.
First-time home buyers and people looking to sell their homes can contact the Federal Savings Bank, a veteran owned bank, to learn more about mortgages.