Share of Fannie and Freddie loans to first-time buyers reaches new high

New ICE origination data offers interesting takeaways on FTHBs

With originations sinking to a 30-year low in 2023, first-time homebuyers (FTHBs) made up an all-time high 47% of all purchase mortgages backed by the government-sponsored enterprises in 2023, Intercontinental Exchange (ICE) reported.

Just 4.3 million mortgages were originated last year, the fewest on record in the 30 years ICE has been keeping track. More than 80% of those were purchase loans, helping push FTHBs to 44% of overall agency securities issuance — a particularly high share.

“Since 1995, only two quarters have seen fewer than 1 million first lien mortgages originated,” said Andy Walden, vice president of enterprise research strategy. “The first was Q1 2023, and Q4 the second. Looking back, last year’s market was dominated by purchase lending, with loans to buy homes making up 82% of a historically low number of originations.

“While it remains a tough market for prospective purchasers, our eMBS (mortgage-backed securities) agency securities database revealed that first-time homebuyers actually made up 55% of all agency purchase mortgages last year. That’s the highest share in the 10 years we’ve been tracking the metric.”

Thirty-nine percent of all government-sponsored enterprise (GSE) securitizations in 2023 were FTHB purchase loans. That’s at least 12 percentage points higher than any other vintage in the past 10 years.

“The market in which these folks purchased their first home was one of record house prices, ballooning down payments, rising rates and elevated DTIs,” Walden said. “Given record exposure to first-time homebuyer loans, it’ll be worth watching the performance of this cohort very closely moving forward, particularly for those invested in 2023 agency MBS.”

Predictably, FTHBs have generally lower credit scores than repeat buyers. This holds true in conventional purchase loans, where the average first-timer has a score nine points lower than the average repeat homebuyer, and in VA purchases, where that gap widens to 23 points. But ICE’s data reveals that among FHA loans, FTHBs and repeat buyers largely carry the same average scores. And interestingly, while first-time buyers have higher front-end debt-to-income ratio (based exclusively on housing expenses) than repeat buyers, their back-end DTIs (which take all other recurring expenses into account) are actually comparable. First-time buyers spend a larger share of income on housing, but typically pay less on other forms of debt.


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