By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > Finance > ‘The dream of homeownership is alive,’ says BofA’s head of retail lending. But for many, it’s just that — a dream
Finance

‘The dream of homeownership is alive,’ says BofA’s head of retail lending. But for many, it’s just that — a dream

News Room
Last updated: 2023/09/08 at 4:37 PM
By News Room
Share
7 Min Read
SHARE

It may be little surprise, therefore, that sales of existing homes and new builds are cooling. Older homeowners are staying put, and younger would-be buyers are strapped for cash.

Contents
Hope vs. reality of homeownership  High interest rates, low credit scoresMortgage applications have fallenBuyers can look into down payment grants

Despite the challenging backdrop, younger generations are not giving up, said Matt Vernon, head of retail lending at Bank of America. “The dream of homeownership is alive,” he said. 

“While they recognize the challenges from an economic perspective, their desire for homeownership persists,” Vernon told MarketWatch on an episode of Barron’s Live.

More than half of prospective homebuyers planned to speed up their home purchases, or buy when they originally planned, the bank found in a survey of homeowners and renters in May. 

Some 62% of Generation Z buyers — born after 1997 — and 55% of millennial buyers — born between 1996 and 1981 — still had plans to buy a home. 

Additionally, 40% of prospective buyers told Bank of America
BAC,
+0.82%
that they felt more confident in their ability to buy a home today versus last year, the report added. 

Hope vs. reality of homeownership  

The current conditions suggest a much grimmer outlook for the housing market, particularly for first-time buyers. In other words, desire alone will not be enough. 

A Redfin
RDFN,
-0.96%
survey released earlier this month said that just 18% of millennials and 12% of Generation Z said they believed they will never own a home.

They cited high home prices, lack of savings for down payment, among other factors. But they had not given up entirely on their dream of owning a home.

The research also found that roughly 40% of Gen Zers and millennials were interested in working second jobs to fund their down payment.

“Is it going to be more challenging? Do you need to be better prepared? And do you potentially need to think about how you go about accomplishing that dream? Sure,” Vernon said.

High interest rates, low credit scores

With the 30-year mortgage rate now over 7%, many homebuyers and existing homeowners looking to move or downsize find themselves in a quagmire.

Higher rates add hundreds of dollars in borrowing costs. They also prompt homeowners to stay put, as selling a home with a low rate and buying another with a 7% mortgage seems illogical. 

More more than half (51%) of BofA’s respondents cited high rates and home prices as a challenge when it came to buying a home, and 37% cited low credit scores and a lack of cash.

There is some hope: In its August forecast, Fannie Mae
FNMA,
+0.69%
expects the 30-year fixed-rate mortgage to drop to 6.7% in the fourth quarter, and reach 6% by the last quarter of 2024. 

But there’s no guarantee that will happen. It’s hard to tell if rates will come down to that range, BofA’s Vernon acknowledged, citing, “the lack of predictability in the market.”

“We’ll probably see some decrease in rates at a very limited level,” Vernon added, although he expects a further decline in rates in the second half of 2024. 

Mortgage applications have fallen

Applications for mortgages from buyers and homeowners looking to refinance have dropped to the lowest level in nearly 30 years. “It’s a very challenging market,” Vernon added.

But not having a down payment may be a blessing in disguise: only 18% of consumers said it’s a “good time to buy a home,” according to a recent Fannie Mae survey, 

“Consumers remain pessimistic toward the housing market in general and home-buying conditions in particular,” Doug Duncan, chief economist at Fannie Mae, said.

“We don’t see much upside to the index in the near future, barring significant improvements to home affordability, which we also don’t expect,” he added.

Buyers can look into down payment grants

Vernon suggested down-payment assistance programs for cash-strapped buyers. For instance, many city housing agencies, nonprofits, and even lenders, offer such grants to buyers. 

Bank of America offers $7,500 in closing costs and a maximum of $10,000 in down-payment assistance.

But these buyers have to meet eligibility requirements such as income and geographic limitations, and they must take out a home loan with Bank of America. 

In New York, the city provides down payment assistance for qualified home buyers that could total up to $100,000. It comes with a list of requirements — from being a first-time owner to making only up to 80% of the area’s median income. 

Buyers in New York also need to attend a home-buyer education course. If successful, the buyers get a forgivable loan of up to $100,000 toward down payment or closing costs on a new home.

In Florida, the state launched a ‘Hometown Heroes Program’ in June that provides up to a maximum of $35,000 in down-payment and closing-cost assistance for buyers who qualify. 

To qualify, buyers should be working full-time with a Florida-based employer, and should buy a primary residence in the community where they plan to work. The program has additional special benefits for “those who have served and continue to serve their country.”

When in doubt, ask. “Talk to your lenders about the grants that are out there,” Vernon said.

Read the full article here

News Room September 8, 2023 September 8, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Donald Trump’s ‘big, beautiful bill’ provides windfall for US immigration crackdown

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

How much money does Ukraine need?

How much money does Ukraine need? I ask the question because the…

Donald Trump and Volodymyr Zelenskyy to discuss pause to US weapons deliveries in call

Donald Trump and Volodymyr Zelenskyy will discuss the abrupt halt in some…

Signs of a pick-up in venture capital exits are finally emerging

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Boeing: Portfolio manager talks 737 Max, headwinds, and future

Watch full video on YouTube

- Advertisement -
Ad imageAd image

You Might Also Like

Finance

4 Ways To Avoid Fake Shipping Fee Swindles

By News Room
Finance

Dell Supports Endeavor Miami’s Quest To Empower Black Founders

By News Room
Finance

The World’s 10 Most Expensive Cities To Live

By News Room
Finance

Biden Sends Student Loan Forgiveness Emails To 800,000 Borrowers

By News Room
Finance

New Student Loan Forgiveness Application For Those With Medical Issues

By News Room
Finance

Who Really Owns Nursing Homes, And How The Feds Are About To Learn More

By News Room
Finance

Gone Are America’s Cushiest Federal Prisons

By News Room
Finance

Can You Still Get Insurance After A Cancer Diagnosis?

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?