The head of the Ohio realtors' association says the partial shutdown of the federal government is making it harder for prospective homebuyers to get a loan.
When it comes to financing a home purchase, roughly 1-in-5 buyers rely on the help of an FHA loan, which is basically a mortgage that's insured by the Federal Housing Administration. But since the partial government shutdown went into effect, delays in the approval process are starting to stack up, said Anjanette Frye, President of Ohio REALTORS.
“FHA doesn't have a full staff to be processing loans, so it's slowing down the lending process,” Frye said. “And there's not really a contingency plan that's suitable in place to fix that problem.”
The past year has already been a tough market for wanna-be homeowners, Frye said, because housing stock in most markets has dwindled in every price range. But first-time homebuyers, in particular, may feel the effects of the slowdown because they tend to gravitate toward FHA loans which have low interest rates and lower down payments, she said.
The shutdown has also put a stop to loan approvals for affordable housing developers and reverse mortgages for seniors. Depending on how long it goes on, Frye said the effect may be felt in the housing market in the coming months.
Correction: An earlier version of the audio in this story incorrectly identified the Federal Housing Administration as the Federal Housing Authority. The audio has been updated.