Morning Briefing: First-time buyers slip away despite low mortgage rates

by Steve Randall06 Nov 2015
First-time buyers slip away despite low mortgage rates
The share of first-time buyers has fallen for the third straight year according to a survey by the National Association of Realtors. Repeat buyers with dual incomes are driving the housing market with first-timers accounting for less than a third of home buyers (32 per cent compared to 33 per cent in 2014). Historic averages show a 40 per cent share of first-time buyers and the current level is the lowest since 1987.

Although interest rates are low and the labor market is stronger, NAR chief economist Lawrence Yar says there are some major hurdles for those wishing to enter the property market: “Increasing rents and home prices are impeding their ability to save for a down payment, there's scarce inventory for new and existing–homes in their price range, and it's still too difficult for some to get a mortgage."
The annual Profile of Home Buyers and Sellers report shows that 86 per cent of home purchases are financed especially among younger buyers. Down-payments vary from 6 per cent for first-time buyers to 14 per cent for repeat buyers. On mortgages, 45 per cent said the process was as they expected or slightly more difficult; 91 per cent chose a fixed-rate loan.
Mortgage denial rates lower, minorities still losing out
The percentage of mortgages being declined has fallen especially among black and Hispanic applicants. Zillow analysis shows that during 2014 11.2 per cent of all applicants were denied a loan, down from 12.4 per cent in 2013 but black applicants were denied in 23.5 per cent of cases, down from 27.6 per cent in 2013. The report shows that there is still work to be done as blacks make up 12 per cent of the population but only 3 per cent of conventional loan applicants and just 2.5 per cent of those approved for conventional loans. Whites, on the other hand, make up 62 per cent of the population, but 69.5 per cent of conventional loan applicants and 71.9 per cent of those approved for conventional loans.
Confidence high in 55+ housing market
Builders say they are confident in the market for single-family homes for over 55’s. The latest survey from the National Home Builders Association reveals that confidence grew in the third quarter of 2015, the sixth straight quarter of gains. “Like the overall housing market, we continue to see steady, positive growth in the 55+ market,” said NAHB Chief Economist David Crowe. “With the economy and job growth continuing to improve gradually, many consumers are now able to sell their current homes at a suitable price, enabling them to buy or rent in a 55+ community.” The three metrics for the association’s index increased; present sales, expected sales in the next 6 months, and traffic of prospective buyers.


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