You may be surprised by the extent of new figures…
First-time homebuyers (FTHB) had the highest share across all of the Intercontinental Exchange’s (ICE) agency purchase mortgages in 2023 – also the highest in the 10 years since it began tracking the metric.
In its March 2024 ICE Mortgage Monitor Report, it revealed that about 4.3 million mortgages were originated in 2023, the fewest seen in the 30 years since ICE began tracking the metric. According to Andy Walden, ICE’s vice president of enterprise research strategy, the byproduct of the low volumes was an altered makeup of recent agency mortgage-backed security (MBS) issuance.
“Since 1995, only two quarters have seen fewer than one million first lien mortgages originated. 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,” said Walden.
“While it remains a tough market for prospective purchasers, our eMBS 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,” he said.
Walden explained that purchase loans by these first-time homebuyers made up 39% of all GSE securitizations.
“The market in which these folks purchased their first home was one of record house prices, ballooning down payments, rising rates and elevated DTIs. 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,” said Walden.
While FTHBs had higher front-end DTIs compared to repeat buyers, their back-end DTIs were more comparable as they spent a large part of their income on housing but paid less on other forms of debt.
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