How active are first-time homebuyers?

LendingTree has reported that first-time homebuyers accounted for majority of the mortgage offers that were given to borrowers on its platform in the past year.

In a nationwide analysis, the online lending marketplace revealed that around 65% of the offers made in 2023 went to individuals purchasing a home for the first time.

New York, California, and New Jersey saw the highest proportions of offers to first-time buyers, with figures at 77.30%, 73.15%, and 72.22%, respectively.

Conversely, South Dakota, Alaska, and Arkansas reported the lowest shares of mortgage offers to first-time buyers, with figures ranging from 54.29% to 56.19%.

But regardless of these variances, LendingTree found that first-time buyers accounted for over half of all mortgage offers in every state.

First-time buyers more comfortable in high-rate market

LendingTree senior economist Jacob Channel said the reason why first-time buyers dominated last year’s sluggish housing market is likely due to their lack of existing mortgage commitments.

The higher-rate environment dampened overall mortgage demand and left existing homeowners reluctant to move away from their lower locked-in rates, according to Channel.

This trend was particularly evident in states like New York and California where housing costs are steep.

Channel also noted that the surge in first-time buyers does not necessarily mean a flood of new entrants into the market. What this indicates is their relative comfort with entering a high-rate market, compared to repeat buyers.

“First-time buyers were likely more comfortable seeking new mortgages, making them a bigger part of a smaller pool of buyers,” he said.

LendingTree’s analysis also highlighted differences in the financial profiles of first-time and repeat buyers.

First-time buyers generally presented lower credit scores, smaller down payments, and sought lower mortgage amounts compared to repeat buyers, according to the analysis.

On average, first-timers were found to have credit scores that were approximately 32 points lower than repeat buyers. Meanwhile, their down payments were $42,218 lower and their loan amounts $49,021 smaller.

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