Conventional Mortgages with Private Mortgage Insurance Became the Largest Source of Credit to First-Time Homebuyers
RICHMOND, Va., Aug. 28, 2018 /PRNewswire/ -- Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (GNW), today released the First-Time Homebuyer Market Report from its Chief Economist, Tian Liu, for the second quarter of 2018. The report aggregates all publicly available government data and proprietary mortgage industry data into one dataset. The below highlights are followed by Liu's analysis, and the full report can be downloaded at https://miblog.genworth.com/first-time-homebuyer-market-report-08-18/
- Single-family homes:
- 189,000 conventional mortgages with private mortgage insurance were originated by first-time homebuyers, the first time that sales of this product have outpaced other low-down payment options during a quarter
- First-time homebuyers accounted for 36 percent of single-family homes sold and 55 percent of purchase mortgages originated
- 454,000 home sales to first-time homebuyers were financed by low down payment mortgages, the highest for a second quarter since this data series began
- Genworth Mortgage Insurance's first-time homebuyer composite interest rate shows that first-time homebuyers paid 0.47% more in interest rates during Q2'18 (4.77 percent) compared to Q2'17 (4.30 percent)
- Monthly mortgage payments for first-time homebuyers increased by 12.6 percent year-over-year
- Homeownership rates for households under 35 years of age increased by 1.2 percent during the second quarter
Comments from Tian Liu, Chief Economist, Genworth Mortgage Insurance
"The market needs to put this quarter's slowdown in first-time homebuyer purchase growth in context. Because while quarterly first-time homebuyer purchase growth was nominal, on a semi-annual basis this group recorded the most single-family home purchases since 2005. That is impressive considering overall home sales declined by two percent during the second quarter, with unusually slow activity in June.
The decrease in home sales was driven by an increase in both interest rates and home prices that together raised monthly mortgage payments for first-time homebuyers by 12.6 percent year over year. Despite this, as well as a slowing in new home construction and a decrease in supply at every price point within the 'affordable home range' of $150,000 to $300,000, buyers under 35 years of age increased their homeownership rate, showing a determination and resiliency to become homeowners.
The market has seen similar down-cycles in recent years, including from 2013-2014, and 2016-2017. In both cases, it took the market between 4-12 months to recover, and this one could again prove to be temporary.
First-time homebuyers have a wide range of low down payment mortgage products today to help them become homeowners, accounting for 79 percent of all home purchase transactions. Over the past few years, conventional loans with mortgage insurance have become increasingly popular. This quarter, for the first time ever, it became the largest source of credit to first-time homebuyers."
About Genworth's First-Time Homebuyer Market Report
The First-Time Homebuyer Market Report is the only economic series measuring the number of home sales and mortgages to first-time homebuyers covering the entire housing market. This report provides quarterly estimates of the first-time homebuyer market since the first quarter of 1994—spanning two housing cycles and 24 years. It provides a historical perspective necessary to understand today's first-time homebuyer market. It is based on a sample size of 22.7 million first-time homebuyers from government reports and industry data. By capturing the entire market over a long period, and providing the latest market snapshot, this report makes the first-time homebuyer market more visible to housing industry participants and policymakers.
For access to the full report, visit: https://miblog.genworth.com/first-time-homebuyer-market-report-08-18/.
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Genworth Mortgage Insurance
About Genworth Financial
Genworth Financial, Inc. (GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
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Opinions, analyses, estimates, forecasts, and other views included in these materials are those of Tian Liu, are based on current market conditions and are subject to change without notice, do not necessarily represent the views of Genworth or its management, and should not be construed as indicating Genworth's business prospects or expected results. Neither Tian Liu nor Genworth guarantees that the information provided in these materials is accurate, current, or suitable for any particular purpose. Forward looking statements should not be considered as guarantees or predictions of future events.