Move-up buyers now outnumber first-time buyers when it comes to total nationwide home sales, as first-time buyers continue to be hindered by tight credit and competition from real estate investors, according to economists at Wells Fargo Securities, National Mortgage News reported June 18.
Prior to the housing crash, first-time buyers represented 50 percent of the nation’s total home sales, but now make up only 29 percent, Anika Khan, WFS senior economist, told National Mortgage News.
In 1999, about a third of first-time buyers under the age of 40 had credit scores below 620 and about 25 percent had scores between 620 and 680, according to WFS, National Mortgage News reported.
Today, mortgage originations for borrowers with credit scores between 620 and 680 are down about 90 percent, while originations below 620 are almost non-existent, Khan told National Mortgage News.
Mortgage underwriting continues to be tight and first-time buyers have to compete with investors who are buying bank-owned properties and lower-priced homes. However, more lenders are increasing their mortgage originations.
“We have seen demand pickup across the country and lenders today are in a better to position to lend than a year ago,” Mark Vitner, WFS senior economist, told National Mortgage News.
Vitner said recent increases in mortgage rates would not deter home buyers, even if rates rise to 4.25 percent to 4.75 percent over the next several quarters.