May 26, 2015--Sorohan, Mike email@example.com
The first-time home buyer share of home purchases in April surged to its highest level in more than four years, the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey said.
Tom Popik, research director for Campbell Surveys, Bethesda, Md., said the increase was spurred in large measure by a reduction in the cost of FHA mortgages; FHA recently reduced its annual mortgage insurance premium for FHA mortgages by 50 basis points to 85 basis points. “Cheap FHA financing looks like it’s making first-time home buyers come out in force,” he said.
The report said first-time home buyers accounted for 37.6 percent of home purchases in April, up from 34.3 percent a year ago, based on a three-month moving average. The last time the first-time home buyer share of home purchases was above 37.6 percent was in August 2010 (40.0 percent). At that time, the annual MIP on FHA mortgages was 55 basis points.
The report also noted 42.2 percent of purchases by first-time home buyers in April used an FHA mortgage, up from a low of 34.2 percent as recently as last September. FHA financing for first-time home buyers has taken market share from the government-sponsored enterprises and the Department of Veterans Affairs in recent months.
Popik said while first-time home buyer activity has been helped by a reduction in FHA premiums, the first-time home buyer share of home purchases tends to peak each year in June or July, suggesting that the share could continue to climb. He said demand from first-time homebuyers is strong, with many seeing owning a home as cheaper than renting.
“However, real-estate agents cited a number of obstacles for potential first-time homebuyers, including saving for a down payment, credit history, a previous foreclosure or short sale and anxiety about income,” Popik said.