March 12, 2020 / Source: CFPB

New report explores trends for first-time homebuyers

By Logan Herman and Kristin Wong – MAR 12, 2020

Today the Consumer Financial Protection Bureau released a new Market Snapshot that explores first-time homeownership. For households attempting to transition from renting to owning, shifts in the housing and mortgage markets can play a large role in whether they can afford to buy a home. This report investigates the prevalence and ease of first-time homeownership today by comparing current and historical market trends.

The analysis in this report primarily relies on the National Mortgage Database (NMDB), a nationally representative, 5 percent sample of all outstanding, closed-end, first-lien, 1–4 family residential mortgages. The NMDB is jointly funded and managed by the Federal Housing Finance Agency (FHFA) and the Bureau; its purpose is to inform and educate federal agencies about lending products and mortgage market health. Other Bureau research that uses the NMDB includes the Ability-to-Repay and Qualified Mortgage Rule Assessment Report , the Mortgage Performance Trends data, and the Servicer Size in the Mortgage Market Data Point .

Key findings include:

• First-time homebuyers have consistently accounted for about half of all home purchase mortgages since 2002.
• Generally, first-time buyers obtain mortgages at the same age they did before the financial crisis. However, when broken down by race and ethnicity, black borrowers become first-time buyers noticeably later. In 2018, the median first-time black borrower was six years older than the median non-Hispanic white borrower. In 2002, the age gap between black and white first-time borrowers was just two years.
• Loans insured or guaranteed by the Department of Agriculture (USDA loans) have become an increasingly important source of credit for rural first-time borrowers. In 2018, USDA loans accounted for 17 percent of loans originated for rural first-time buyers, compared to 5 percent of the entire first-time borrower market.