The gap in the ages at which white and non-white borrowers became first-time homeowners grew from 2002 to 2018, according to a federal consumer protection bureau report on market trends released Friday.
The Consumer Financial Protection Bureau (CFPB), in its “market snapshot” exploring trends in first-time homeownership, shows that first-time homebuyers have consistently accounted for about half of all home purchase mortgages since 2002. Overall, it shows that first-time buyers obtain mortgages at the same age they did before the financial crisis. But when broken down by race and ethnicity, black borrowers became first-time buyers noticeably later, the bureau reported. In 2018, the median first-time black borrower was six years older than the median non-Hispanic white borrower. In 2002, the bureau noted, the age gap between black and white first-time borrowers was just two years.
The report also looks at changes in the age of first-time homebuyers in large metropolitan statistical areas (MSAs) and rural areas, trends following the loosening of combined-loan-to-value and debt-to-income standards, borrower credit scores, and a migration of first-time homebuyers from the private market to government-sponsored enterprises.
Growth in the use of Department of Agriculture- (USDA) and Veterans Affairs-backed loans is also examined. For example, the report shows that USDA loans in 2018 accounted for 17% of loans originated for rural first-time buyers, compared to 5% of the entire first-time borrower market. The CFPB said its research also shows that the share of first-time homebuying servicemembers using VA loans increased from 30% before 2007 to 78% in 2016.
Generally, the report shows that USDA loans went from 1% of first-time buyer originations to 5% from 2002 to 2018, and the VA market share increased from 4% to 9%.