It may be a statistical blip on the map or it could foreshadow a larger shift in the marketplace. Either way, the share of mortgage originations by Generation Z borrowers grew significantly year over year, according to a new Transunion report.
Gen Z borrowers accounted for 13.2% of all mortgage originations in third quarter of 2023, up from 9.6% in the same period the year prior, according to the Transunion’s Credit Industry Insights report released on Thursday. While millennials remain the largest cohort obtaining mortgages, Gen Zers are aging into traditional homebuying ages. All the generations except for Gen Zers saw their share of the market decline in the quarterly report.
Overall originations, however, continued a decline from the heady days of the COVID-19 pandemic. Transunion reports that only 1.2 million mortgages, both purchases and refinances, were originated in Q3 2023. That’s a 22% decline from the 1.5 million mortgages originated in the same quarter 2022.
“Persistently high mortgage rates remain a significant headwind in the mortgage market, particularly affecting demand for refinance,” said Satyan Merchant, a Transunion senior vice president, in a press release. “Purchase originations will continue to drive the mortgage market over the next several quarters, as demand for refinance will depend on mortgage rates falling significantly below current high levels.”
The good news is Q3 2023 saw the smallest year-over-year decline in the past seven quarters, indicating the mortgage origination market may be near its bottom. And Q3 2023 numbers nearly mirrored the second quarter of 2023 numbers, both just about 1.2 million originations.