ICE Mortgage Monitor

First-Time Homebuyers Make Up Record 47% of GSE Purchase Loans, 39% of All GSE Securitizations in 2023

Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, released its March 2024 ICE Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets. Drawing from ICE’s eMBS agency securities database and ICE Market Trends originations data, the report notes just 4.3 million mortgages were originated in 2023, the fewest in the 30 years ICE has been tracking the metric.

Andy Walden, ICE Vice President of Enterprise Research Strategy, explains that one byproduct of such low volumes is a significantly altered makeup of recent agency mortgage-backed security (MBS) issuance.

“Since 1995, only two quarters have seen fewer than 1 million first lien mortgages originated,” Walden said. “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 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.”

“In fact, FTHB purchase loans accounted for an exceptionally high share of all issuance activity last year. They made up 39% of all GSE securitizations in 2023 – 12 percentage points higher than any other vintage in the past decade. 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.”

Leveraging ICE Market Trends origination data sheds further light on FTHB trends. While on average, FTHBs have higher front-end DTIs than repeat buyers, their back-end DTIs are more comparable. FTHBs spend a greater share of their income on housing than repeat buyers but pay less on other forms of debt in comparison. While credit scores remain elevated among conventional purchase loans overall, the average FTHB has a 9-point lower credit score than the average repeat buyer. The delta widens among VA purchase loans, with the average FTHB credit score (709) in January 23 points below that of the average repeat buyer (732). Interestingly, FHA loans, the choice for many lower credit score buyers, have broadly the same average credit scores among both first time and repeat buyers.