(Reuters) - Fannie Mae (FNMA.PK) said on Tuesday it had launched several new programs for borrowers saddled with student loans to reduce their interest payments or help them buy a home.
U.S. student loans outstanding, which reached a record $1.31 trillion in 2016, have raised concerns about their drag on consumer spending and homeownership, according to analysts.
“These new policies provide three flexible payment solutions to future and current homeowners and, in turn, allow lenders to serve more borrowers,” Jonathan Lawless, Fannie Mae’s vice president of customer solutions said in a statement.
One of the programs allows homeowners to refinance by combining their mortgage with student loans, which may result in a sizable drop in monthly payments.
There are roughly 8.5 million homeowners with student loans, according to Lawless.
Interest rates on private student loans may run as high as 8 percent, compared with under 4 percent on a 30-year fixed-rate mortgage in the latest week.
For a homeowner to qualify for refinancing under the Fannie May program, the consolidated total of the mortgage and student loan cannot exceed $424,100. The homeowner must also meet other borrowing criteria for the loan, Lawless said.
For potential new home buyers, Fannie Mae said a consumer saddled with student loans would be able to exclude debt such as credit cards, auto loans, and student loans paid by someone else from their debt-to-income ratio.
It will also allow lenders to accept student loan payment information on credit reports, making it easier for borrowers with student debt to qualify for a mortgage, the Washington-based mortgage finance agency said.
Fannie Mae and Freddie Mac (FMCC.PK) guarantee home loans and package them into securities for resale to investors.
Reporting by Richard Leong