RICHMOND, Va., May 18, 2017 /PRNewswire/ -- Thirty-nine percent of mortgage industry professionals believe that consumers' lack of knowledge about the homebuying process is one of the greatest impediments to first-time homebuyer demand, according to a recent survey of mortgage industry executives by Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW). Following closely behind was lack of inventory (28 percent) and excess student debt (27 percent). Rising interest rates came in at six percent.
The survey was conducted at the 2017 Mortgage Bankers Association Secondary Market Conference recently held in New York City.
The greatest cause of confusion among first-time homebuyers is the role of a 20 percent down payment. 28 percent of respondents said consumers still mistakenly believe that a 20 percent down payment is a requirement for purchasing a home, keeping many first-time buyers from achieving their homeownership goals. Interestingly, an additional 41 percent of industry executives surveyed believe that even among prospective borrowers who understand a 20 percent down payment is not mandatory to purchase a home, the belief persists that it would be difficult to get into a house with less.
"While first-time homebuyers continue to drive the purchase market, we believe many are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage," said Rohit Gupta, CEO of Genworth Mortgage Insurance. "There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they're ready."
As a key player in the private mortgage insurance space, Genworth Mortgage Insurance continues to explore solutions that can help facilitate a seamless process for lenders as well as consumers. Private mortgage insurance is an effective solution for credit worthy buyers entering the purchase market with less than 20 percent to put down, without them having to wait for what can take many people several years to save that amount.
Following are additional findings from this survey, which provide insights into the industry's appetite for technology integration, front-end credit risk transfer and underwriting standards:
Industry Appetite for Increased Technology Growing but Faces Integration Headwinds
While the industry is overwhelmingly aware of the need for improved technological infrastructure for originating mortgages (93 percent), respondents are divided on what is holding the industry back. Outdated mortgage technology platforms requiring extensive overhauls (35 percent), the lack of a true understanding of the requirements for integration (29 percent), and the rising associated costs (29 percent) were seen as the biggest obstacles to bringing better technology into the home lending process.
Experts Excited About Opportunity for Deeper MI
Eighty-five percent of respondents believe front-end credit risk transfer with deeper mortgage insurance would have a positive impact on the mortgage industry. This majority believes that deeper MI would lower taxpayer risk, with many in this group believing that it would do so without increasing borrower costs. Only 15 percent of those surveyed saw no need to change the current system of relying on capital markets for back-end credit risk transfer deals.
Industry Divided on Underwriting Standards
While sentiment about today's underwriting standards is still divided, there is a consensus that credit quality has improved. Exactly half of industry executives surveyed see today's mortgage underwriting standards as too high, resulting in quality borrowers being excluded, and 43 percent think that today's current standards are appropriate for the market. Only seven percent thought that today's standards were too low.
Methodology: The Genworth survey of 150 mortgage professionals was administered in person at the Mortgage Bankers Association Secondary Conference in New York City from May 1-2.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
SOURCE Genworth Financial, Inc.