17 Million First-Time Homebuyers May Enter Housing Market within Next 5 Years - Seite 2

"First-time homebuyers are valuable prospects in the eyes of many mortgage lenders, as that time in a borrower's life often corresponds to additional financial needs. It is evident from trended data that first-time homebuyers show distinct credit characteristics that distinguish them from non-buyers. They often have higher credit scores than non-buyers; yet even within the same credit risk band, they are often more credit active and exhibit more credit responsible behavior," said Joe Mellman, vice president and mortgage line of business leader at TransUnion. "First-time homebuyers also can positively impact the economy as a whole. While they themselves can build wealth through gains in equity, along with mortgage interest and real estate tax deductions, local communities benefit from economic activity as a result of construction, remodeling and home improvement activities."

Inside the First-Time Homebuyer Projection

Partnering with AnswerMine, a machine-learning model development firm, TransUnion developed a model examining thousands of credit attributes and scores. The resulting "First-Time Homebuyer Propensity Model" identifies specific consumers likely to become first-time homebuyers. Using this model, TransUnion determined that there could be nearly three million first-time homebuyers over the next year.

"We are quite pleased with the model's accuracy in identifying first-time homebuyers. In a study earlier this year, we predicted just over 500,000 first-time homebuyers for the first quarter of 2016. Looking back at that time now, it turns out that is how many first-time homebuyers there actually were," said Mellman.

Looking over the next five years, TransUnion estimates there could be 13.8 to 17.1 million first-time homebuyers entering the housing market. These projections are based on U.S. consumers who do not currently have a mortgage, coupled with long-term estimates for growth in the mortgage purchase market and the percentage of first-time homebuyers in the agency and government purchase market.

This would add a significant number of consumers to the mortgage pool. For comparison, 6.2 million consumers opened a new mortgage in 2015, approximately three million of which were first-time homebuyers.

"It's clear that there should be many new homebuyers in the market in the next few years," said Chaouki. "Our hope is that, with the use of trended data, mortgage lenders can better serve these consumers. We anticipate the benefits of trended data will continue to expand to other lenders, as we believe this is the future of credit scoring."