First-time Buyers Shunning Low-Interest Fannie and Freddie Loans

Dec. 22, 2015 — Fannie Mae and Freddie Mac meant well when they introduced mortgage programs requiring only a 3 percent down payment as a way of putting home ownership within reach for first-time buyers. But the programs, introduced in late 2014 and 2015 respectively, appear to be too little, too late.
Buyers continue to prefer low down payment loans from the Federal Housing Authority and the Dept. of Veterans Affairs, which continue to make up at least 90 percent of all high loan-to-value loans, reports The New York Times.
Why are buyers shunning Fannie and Freddie? For one thing, monthly payments on an F.H.A. loan can be considerably lower. For another, the need Fannie and Freddie hoped to meet is already being met. “They were late to the party,” says Brian Koss, executive vice president of Mortgage Network, an independent mortgage broker in Danvers, Mass. “And they chose some of the more restrictive approaches.”