Zillow Group has recently launched a groundbreaking 1% down-payment program, aimed at expanding access to the housing market for individuals who previously struggled to afford the initial cost of buying a home.
The program, introduced by Zillow Home Loans, is currently available in Arizona and is expected to be extended to other markets in the near future. Under this program, qualifying borrowers only need to provide a 1% down payment, while Zillow Home Loans will contribute an additional 2% at closing.
According to a news release by Zillow, many markets are experiencing an affordability crisis, making it increasingly challenging for potential homebuyers to save for a significant down payment. First-time homebuyers, in particular, face the greatest obstacles, as rising home prices and mortgage rates reach historic highs.
Recognizing these challenges, Orphe Divounguy, Zillow Home Loans’ senior macroeconomist, stated that programs like this are instrumental in reducing potential barriers to homeownership for those who meet the qualifications. Divounguy emphasized that renters, who already face high monthly housing costs, often struggle to accumulate sufficient savings for a large down payment.
This initiative comes at a time when purchasing a house has become more expensive than ever in recent decades. As of Thursday, the average 30-year mortgage rate, as reported by Freddie Mac’s weekly primary mortgage market survey, stood at 7.23% – the highest level since 2001.
As a result of these high mortgage rates, there has been a decrease in both home purchase and refinance application volumes compared to previous years. The Mortgage Bankers Association confirms that application levels are currently below those recorded in 2020 and 2021.
Zillow’s shares experienced a slight increase of 0.4% in premarket trading on Friday, reaching $50.34. Overall, the stock has soared by an impressive 56% in 2023.
