Lenders Easing Up on Down Payment Requirements?

Tight credit conditions are showing more signs of easing, just in time for the spring buying market to heat up, CNBC reports. Home buyers may be able to qualify with lower down payments—a big shift from the last four years when 20 percent down payments on a loan were practically required. But mortgage giants such as Fannie Mae are reportedly approving more loans with lower down payments, even buying loans with as little as 3 percent down, CNBC reports. However, these loans do require private mortgage insurance. Fannie Mae is seeing its share of the market rise as FHA—which used to be one of the only agencies to offer low down payment loans—is seeing its market share shrink as it raises its premiums. Loans with between 3 and 10 percent down payments accounted for 18 percent of Fannie Mae’s business for home purchase loans in the third quarter of 2012, the latest data available. "In general lenders have been willing to do more than they may have been willing to do in the past," says John Forlines, chief credit officer for Fannie Mae's single family business. "Our requirements have not changed significantly, but other parties taking risk, the lenders and mortgage insurance companies in particular, have been more flexible than they may have been in the past."

Wekly Info: 03/08/2013

At dawn today came glorious news: in February the nation added 236,000 jobs, and the prior two months were revised up another 61,000, in sum double the forecast. When you're hit by one of these surprises, you stare at the market effect before studying the report: stock market futures rocketed before the open, and bonds tanked. But by midday today markets no longer believed the job data: the Dow up only 23, the 10-year T-note damaged, but trading 2.06%, above the 2013 top by only 0.03%, mortgages holding in the high threes. The ISM reports in the mid-50s showed some modest health in February. Next week we'll hear from small business, at all accounts still stalled. Housing is still the darling of all optimists... change there? MGIC every 90 days releases a regional summary for its underwriters; of 73 markets covered, suddenly 25 are rated as "improving," the best since 2005. But, improving from what? 32 metro areas are rated "stable," 23 are "soft," and the last 18 are "weak." Not one, single market rates "strong." MGIC's adjectives are based on price appreciation. Housing is better, and will get better yet, but is not yet pulling the economy forward.