Loan Programs

Survey Shows Americans Want More Government Involvement in Lending

By James Comtois

WASHINGTON-With an unstable economy and slowdowns in the housing market, most consumers are open to the federal government taking a more active role in overseeing mortgage and lending practices, according to the 2008 National Housing Pulse Survey, an annual survey released today by the National Association of Realtors.

The survey, which measures how affordable housing issues affect consumers, also found that affordable housing concerns are the lowest in six years of polling.

"As the leading advocate for homeownership and housing issues, NAR has supported more government oversight in lending as a result of abusive and predatory lending practices that have caused families to lose their homes and savings and led to increased foreclosure and vacancy rates," said Realtors president Dick Gaylord. "The survey also shows that falling home prices have improved housing affordability, allowing many Americans, some of whom may have been priced out of the market a few years ago, to achieve homeownership."

More than half of those surveyed (56%) favor the federal government taking a more active oversight role in lending and mortgages, while 38% prefer that private companies oversee their businesses. That is a marked shift from the 2007 survey, which showed respondents were more evenly split on the issue of government involvement.

With home prices down in many parts of the country, concerns about the lack of affordable housing are the lowest they've been in six years of polling (39%); down from 48% last year and the survey high of 51% in 2005.

Nearly eight out of 10 consumers believe the country is headed in the wrong direction, and a majority (55%) rates the current state of the economy as poor. Survey respondents don't expect to see improvement in the economy anytime soon either; more than two-thirds believe the economy will stay about the same or get worse over the next year.

Regarding the economy, Americans are most concerned about high energy costs including gasoline and utilities, followed by inflation and higher priced staples such as groceries, increased health care costs, job security and reduced wages, as well as challenges in the housing market, including foreclosures and reduced home values.

Despite troubles with the economy and difficult housing news, Americans remain surprisingly confident about the housing market. The survey found that 85% of respondents believe buying a home is a good financial decision, down 2% from last year. Two-thirds of Americans believe now is a good time to buy a home, up nearly 12% from 2007.

"Homeownership offers immediate benefits and long-term value, and despite recent slowdowns in some markets, consumers continue to believe that now is a good time to buy a home," Mr. Gaylord added.

When it comes to challenges facing their communities, Americans are less concerned about the lack of affordable housing than a lack of affordable health care options, job layoffs and unemployment. This year's results shows that the economy, energy, the war in Iraq, health care and taxes are among Americans' top voting issues.

Foreclosures also remain a concern among many Americans. More than one-quarter of respondents expressed concern that their home or the home of a family member may be foreclosed upon because of their inability to make mortgage payments. Nearly half of respondents (46%) report that foreclosures are a problem in their area, up from 38% in 2007; and 42% say the rate of foreclosures has increased over the last year.

Nearly four out of 10 say the economy has taken a personal toll and report their personal financial situation has gotten worse over the course of the past year; the majority, 47%, feel their personal financial situation has stayed about the same. Despite these challenges, people remain optimistic that they could secure the credit they need; eight out of 10 are confident in their ability to refinance should they have the need. Only 8% of respondents are worried about being able to make their mortgage payments over the next year.

Of those with a mortgage, 26% have some type of variable-rate mortgage, including interest-only (19%), adjustable rate (7%) or balloon or other large payment due in the next five years (1%). Two years ago, the percentage of respondents holding a variable-rate mortgage was twice as high (56%).