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Home » First-Time Buyers Continued Gaining Share in Red-Hot Purchase-Mortgage Market of 2Q18

First-Time Buyers Continued Gaining Share in Red-Hot Purchase-Mortgage Market of 2Q18

October 15, 2018
John Bancroft

First-time homebuyers accounted for over half of the purchase-money mortgages securitized by Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter of 2018, according to a new anal-ysis of mortgage-backed securities data by Inside Mortgage Finance.

A total of $99.16 billion of first-timer purchase loans were funded through agency MBS programs in the second quarter, equaling 51.1 percent of total agency purchase-mortgage business. By loan count, first-timers represented 54.4 percent of the market. These figures exclude a small percentage of loans that lack data on credit score, loan-to-value ratio and debt-to-income ratio.

First-time buyers have traditionally flocked to the FHA program because of its relatively low downpayment requirements. In the second quarter, 76.6 percent of the $41.18 billion in FHA purchase loans went to first-time buyers, and volume was up 25.1 percent from the first quarter.

But private mortgage insurers have made a significant dent in the first-timer market. Lenders delivered $38.38 billion of first-timer mortgages to Fannie and Freddie MBS, a 34.4 percent jump from the previous three-month period and a 22.7 percent gain from the first half of last year. FHA first-timer business was actually down 5.2 percent on a year-to-date basis.

Total purchase-mortgage originations were up 42.5 percent from the first quarter of 2018 to the second, hitting an estimated $325.0 billion. Purchase loans accounted for 73.0 percent of first-lien mortgage originations in the second quarter, the highest level in many years.

The peak of the purchase-mortgage market last year came in the third quarter, but home sales figures have been somewhat soft in recent months.

Refinance activity fell sharply in the second quarter, dropping 21.1 percent from the first three months of the year to just $120.0 billion. That was the lowest refi output since the second quarter of 2014, when originations totaled an estimated $114.0 billion.

KEYWORDS home loan homebuyer Originations
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