Lawmakers oppose 20% down payment mortgages

Signing a mortgage

Jeremy Hobson: The mortgage bankers assocation said this morning that applications for mortgages dropped last week despite an average interest rate of 4.5 percent for a standard home loan. One of the hurdles to buying a house these days is a 20 percent minimum down payment. And today a group of lawmakers will say that hurdle is too high.

Marketplace's John Dimsdale reports.


John Dimsdale: At 20 percent, the buyer of an average-priced home would have to bring $40,000 cash to closing.

Barry Zigas with the Consumer Federation of America says that puts home ownership out of reach.

Barry Zigas: The proposed regulation would consign an entire class of renters today to being renters for a very long time.

But regulators say no or low down payments are why many home buyers now owe more than their property is worth.

Peter Wallison at the American Enterprise Institute says home buyers need to put more skin in the game.

Peter Wallison: When a home buyer puts more money into the home in the form of a down payment, the home buyer has made a commitment to the home and is likely to stay with that commitment.

The consumer federation's Barry Zigas says borrowers shouldn't suffer for the sins of banks.

Zigas: We think the current crisis was caused by the complete abandonment of responsible underwriting principles.

Consumer groups say strengthen lending standards, but leave minimum down payments alone.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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