ARLINGTON, Va. A study from the Mortgage Bankers Associations Research Institute for Housing America says that lenders can increase national homeownership rates by creating products that curb borrower constraints.
The study, conducted for the institute by Stuart S. Rosenthal, a professor of economics in the Maxwell School at Syracuse University, asserts that eliminating borrowing constraints would boost the owner-occupancy rate among nonfarm families in the United States by 4 percentage points. Lifting such constraints can increase homeownership rates for low-income households by 10 percentage points and for young and middle-aged household heads by roughly 7 percentage points, it says. The current homeownership rate among nonfarm families is 67.5%.
Borrowing constraints include down payment standards and lender-imposed payment-to-income ratios.
This study points to untapped market opportunities for lenders, said Steven Hornburg, executive director of the research institute. While a 4-percentage-point increase is an upper bound, Dr. Rosenthals findings point out the business potential of further financial innovation in loan products.
The study was issued Thursday.
The study also looked at the effect of borrowing constraints on renters expectations of becoming homeowners. It found that eliminating the constraints would increase the number of renters who expect to own a home in the next decade by 7.6 percentage points, to 34.3% from 26.7%. Such an increase would push the national homeownership rate up by 2.5 percentage points.