Mortgage habits of home buyers
The 2011 National Association of Realtors® Profile of Home Buyers and Sellers surveyed 5,708 home buyers and sellers and revealed that the number of buyers that financed their home purchase dropped to 87 percent, down four percent from 2010 and down even more from a consistent 92 to 93 percent from 2003 to 2009. The report indicates that this year, there is a higher percent of owner-occupants and a lower percent of investor-buyers relative to the whole home purchase market.
The likelihood of financing depended upon the buyer, with 96 percent of buyers age 25 to 44 financed their home purchase, while less than two in three buyers over 65 used financing. Likewise, first time buyers were more likely to finance than repeat buyers and unmarried couples were less likely than married couples to use financing.
First time buyers were more likely to finance their entire purchase than repeat buyers, with only 5 percent of first time buyers choosing not to finance the full purchase price compared to 15 percent of repeat buyers. Overall, however, 13 percent of buyers financed 100 percent of the entire purchase price with a mortgage.
Realtors continue to cite contract failures as the biggest obstacle in the industry as consumers either fail to qualify initially or at the eleventh hour. Dr. Lawrence Yun, NAR chief economist, recently said that the market has been stable although at low levels, and there is plenty of room for improvement.
“Existing-home sales have bounced around this year, staying relatively close to the current level in most months,” said Yun. “The irony is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable – this speaks to an unfulfilled demand.”