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ICE Mortgage Monitor: First-Time Homebuyers Comprise Record Share Of Agency Purchase Lending In Q1 2025 - Gen Z Homebuyers Accounted For One In Four FTHB Loans As FHA Lending Drives Purchase Mortgage Growth

Date 05/05/2025

Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of technology and data, today released its May 2025 Mortgage Monitor Report, which delves into the rising share of first-time and Gen Z homebuyer participation in the mortgage market. Notably, first-time homebuyers (FTHBs) accounted for a record share of agency purchase lending in Q1 2025 as higher interest rates continued to dampen repeat buyer participation in the market. At the same time, Gen Z buyers made substantial gains in more affordable states, while FHA loans regained popularity as a critical tool for affordability-minded homebuyers.

“While first-time homebuyers continue to face affordability headwinds, they don’t have the same disincentive to transact as many repeat buyers, who remain locked in the golden handcuffs of relatively low monthly payments on their existing homes,” said Andy Walden, Head of Mortgage and Housing Market Research for ICE. “Younger homebuyers are picking up market share with lenders this spring, with people age 35 and under accounting for more than half of financed home purchases by first-time buyers in Q1.”

Highlights from the May 2025 Mortgage Monitor include:

  • First-time homebuyers are driving a record share of agency purchase lending

    FTHBs made up 58% of such purchase lending in Q1 2025 – the highest share on record. Notably, while repeat-buyer activity has softened markedly from pre-pandemic levels – with originations among this group down 31% compared to 2018 and 2019 – FTHB volume has seen less compression, declining only 19%. In fact, purchase lending overall has made up a larger share of issuance in recent years, with purchase loans accounting for a record 82% of agency lending in 2023, more than 75% last year, and nearly three-quarters in Q1 2025
  • Gen Z accounts for one in four loans issued to first-time homebuyers

    Younger buyers are also starting to reshape the homeownership landscape. Gen Z, the oldest of whom are 28, accounted for roughly one in four FTHB mortgage originations in Q1 2025. Gen Z participation is higher in lower-cost markets, with Indiana, South Dakota, and Kentucky seeing Gen Z shares top 30% of FTHB activity. However, affordability challenges continue to constrain Gen Z participation in higher-priced coastal markets. D.C. has the lowest share of Gen Z buyers, with a mere 7% of all purchase mortgages and 11% among FTHBs. California is close behind, with Gen Z comprising 8% of purchase and 13% of FTHB loans.
  • First-time home buyer down payments lag repeat buyers by $80K

    With the housing market softening and affordability still a challenge, FTHBs moved increasingly towards FHA loans, which have lower down-payment requirements. ICE Origination Data shows that the average FTHB in March put $49K down on their home purchase, well below the $134K average among repeat buyers. While the average FTHB using a conventional conforming prime loan typical of GSE securitizations provided a $77K down payment, FTHBs financing with FHA loans put down significantly less ($16K). FTHBs who qualified for VA mortgages had even lower average down payments of just under $10K.
  • eMBS performance trends show first-time homebuyers had slower prepayments but higher defaults

    While performance can vary significantly by cohort, ICE eMBS data reveals two trends that are notable given increased exposure to FTHB purchase loans in recent vintages. For one, prepayment speeds among loans to FTHBs tend to run noticeably slower than loans to repeat buyers. Also, FTHBs tend to be more prone to default, though this trend can vary significantly across vintages, cohorts and investor classes.

“With first-time homebuyers making up an elevated share of purchase originations and Gen Z beginning to emerge in the market, lenders have a powerful opportunity to meet this digitally native generation by offering intuitive digital tools such as online applications, self-service portals, and document upload capabilities,” said Andy Walden. “At the same time, capital markets participants should closely monitor how this shift may influence loan performance and portfolio behavior as these buyers gain a stronger foothold in the housing market."

Further detail, including charts, can be found in this month’s Mortgage Monitor. The full report also contains a housing market update featuring April ICE HPI data, as well as a deep look into March mortgage performance data.