A survey of 1500 Century 21 professionals released this week confirmed what many real estate agents and buyers have been saying for months: The lending environment is too constraining for potential homebuyers, slowing the rebound of the housing market and the economy in general.
According to the Century 21 survey, the pendulum has swung too far towards overly stringent credit scores, high down payment requirements and a general lack of available financing, keeping potential buyers from moving forward.
- 89 percent of Century 21 real estate professionals had at least one customer in the past six months experience some level of difficulty in qualifying for a mortgage loan.75 percent of survey respondents had one or more transaction fail in the last six months due to customers’ inability to obtain mortgage financing.
- 93 percent of all respondents estimated they could be doing more home sale transactions – 32 percent more on average — if their customers had a quality subprime mortgage alternative available to them, defined as being fully documented with down payment, income verification and reasonable credit requirements.
- 63 percent of those respondents estimated they could be doing over 20% more home sale transactions.
- 59 percent said their buyers’ or sellers’ transactions failed due to low property appraisals .
- 62 percent of respondents reported that they did not see any improvement in the mortgage market from this same time last year.
- 72 percent said their conventional loan business declined due to current mortgage market conditions, and nearly half (46 percent) of those respondents said that their conventional loan transactions had decreased by 30 percent or more compared to the prior year.
- 42 percent said their jumbo loan business declined due to current mortgage market conditions, and nearly two-thirds (61 percent) of those respondents said that the extent of the decline in their jumbo loan transactions was greater than 20 percent compared to the prior year.
“Our network of franchisees and their sales associates do business in all 50 states, and their responses to our survey demonstrate that the current mortgage lending environment is too constraining for potential home buyers, and it is detrimental to both a housing and general economic recovery,” said Rick Davidson, president and CEO of Century 21 Real Estate LLC. “We believe the pendulum has swung too far and that otherwise qualified potential home buyers are facing significant challenges in obtaining mortgage financing in today’s market. Our survey responses indicate that this is largely attributable to overly stringent credit score and related financial qualification requirements, high down-payment requirements and the lack of readily available financing from lending institutions. A significant number of our CENTURY 21® professionals have characterized these factors as presenting ‘a major problem’ for some of their customers.”