According to a nationwide survey conducted by Fannie Mae, tainted mortgage borrowers will most likely be renting instead of buying in the next year. Less and less borrowers believe that it is a smart time to invest in a home and even more think it is a bad time to sell. Since the last survey conducted in June, 68% of borrowers think it is a good time to buy (down 2%) and a whopping 85% think it is a bad time to sell their homes.
Many borrowers are losing their faith in the housing market, driving them to choose renting instead of owning. Since Fannie Mae’s January survey, 45% of delinquent borrowers would choose to buy a home (down 11%) and 50% would choose to rent (up 10%). Delinquent borrowers feel safer renting even though most recorded thinking that rental prices will increase more than home prices.
Borrowers who have defaulted on their loans make up a large portion of the home borrowers today. In America, 42% of the population knows someone who has defaulted on a home loan. To narrow it down more, 63% of delinquent home borrowers and 58% of underwater borrowers know someone who has defaulted. Naturally, the statistics get higher depending on what level of delinquency the borrowers are within.
Some borrowers are scared of defaulting on their loans because of recourse. Many borrowers, 51% in all, believe that lenders will pursue them for more assets than just their house if they are to default on their loan. Most borrowers feel that the risk is too high to buy another home and do not feel that it is a safe investment at this time. Due to these factors, it is predicted that this next year will consist of more renters than buyers.
What can real estate and mortgage professional do to help getting borrowers to buy homes? One approach, something that has been talked about and discussed before, is upping the customer service and reassurance throughout practices. A study was done that showed that borrowers put customer services above rates when it came to getting a loan. That means that the reassurance and help from a mortgage professional could be more important than the actual amount of money paid. If that is the case, then mortgage and real estate professionals could focus more on informing their customers and business clients about what is happing in the industry and make them feel like they are making the best financial decision instead of trying to pump out as many loans and sell as many houses as possible regardless of the final outcome for the borrower. It is a thought and something that the Think Big, Work Small guys seem to agree with. Check this out.......
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