According to American Bankers Association (ABA), in 2014 (the most recent year for which data are available), the rate by which mortgage lenders approved loans for first-time homebuyers was the highest (14 percent) in the 21 years that the organization has tracked the figures. Robert Davis, who is the executive vice president at ABA, wouldn’t be surprised if that rate remained at that level for 2015.
Coby Hakalir, who serves on the board of directors for Chicago Association of Realtors, says, “We’ve certainly seen an increase in conventional lending products available to first-time homebuyers over the last 2 to 3 years, and we expect that trend to continue.”
Adding to the positive news, real-estate experts predict that we might see so-called portfolio loans offered to first-time homebuyers.
According to Hakalir, “Portfolio lending means the bank is making a loan and not selling it on the secondary market or to one of the [government-sponsored enterprises], like Fannie Mae or Freddie Mac. A portfolio loan is only subject to the bank’s determined guidelines, and those guidelines are typically outside of what most customers find readily offered when applying for a home loan.”
Typically, portfolio loans are made on an “exception” basis to retain customers, Hakalir explains, particularly those who have large deposits at the bank. When you consider that first-time homebuyers typically aren’t among that group, banks’ willingness to hold the loan themselves is good.
The dream of homeownership seems to be closer to a reality for more first-time homebuyers now than it has been in recent years.