Black Knight: First-Time Homebuyers ‘Under Pressure’ as Early-Stage Delinquencies Rise

Black Knight, Jacksonville, Fla., said nearly 1% of first quarter originations became delinquent six months post-origination. Though this represented less than one-third of the 2000-2005 delinquency average of 2.93%, it is up more than 60% over the past 24 months and the highest since 2010.

The company’s monthly Mortgage Monitor report said the increase has primarily been driven by a rise in early-stage delinquencies among purchase loans. First-time homebuyers have been steadily making up a growing share of originations, accounting for 42% of GSE and more than 70% of all Ginnie Mae purchase loans.

The report said rises in early-stage purchase loan delinquencies were more pronounced among first-time homebuyer loans examined, with steadier performance among repeat buyer loans. Rising debt-to-income ratios from home affordability pressures were at least one likely driver in increasing early-stage delinquencies among first-time homebuyers. However, repeat purchasers faced the same affordability challenge and performance among this group has been steadier, suggesting falling credit scores among first-time homebuyers may have had more impact than DTIs.

“We’ve seen early-stage delinquencies rise over the last several years, with the increase being driven primarily by purchase loans,” said Black Knight Data & Analytics President Ben Graboske. “Though there has been some softening in GSE purchase loan performance, it hasn’t been to the extent seen among entry-level buyers. All in all, first-time homebuyer originations combined between the GSEs and Ginnie Mae increased by nearly 50% between 2014 and 2018. However, whereas first-time homebuyers represent just over 40% of GSE purchase loans, they make up 70% of the GNMA purchase market.”