Small Mortgages Are Disappearing, Even as Federal Policy Targets Barriers to Access

Joel Berner, Senior economist at Realtor.com

“Small mortgages are not simply fading because lower-priced homes are harder to find; the financing itself has become harder to access”

Joel Berner, Senior economist at Realtor.com

“When the share of low-priced home sales is roughly four times the share of small mortgages, it points to a market where the costs and complexity of originating a modest loan can stand between buyers and an attainable home. The 21st Century ROAD to Housing Act is an important step toward addressing those barriers by targeting the fixed costs, fee structures and appraisal challenges that can make small mortgages uneconomic for lenders.”

Joel Berner, Senior economist at Realtor.com

“Small-mortgage borrowers are bringing strong credit and significantly larger down payments to the table, yet they continue to face higher rates”

Joel Berner, Senior economist at Realtor.com

“That mismatch illustrates why the economics of a small loan matter: many of the costs to originate a mortgage do not shrink with the loan balance. Making it easier to responsibly originate these loans could help more buyers finance lower-priced homes, particularly in rural communities where small mortgages remain an important part of the market.”