Millions of First-Time Buyers in Motion as Trended Data Expands Opportunity

First-time homebuyers are expected to enter the housing market by the tens of millions within the next five years, with nearly three million projected to join in 2017, according to a recently released study by TransUnion. The study approximates between 13.8 to 17.1 million first-time homebuyers will enter the market over the next five-year period.
 
The findings were determined based on mortgage purchase market growth projections and the percentage of first-time buyers in the agency and government purchase markets against the amount of consumers who do not have a mortgage, and come following Fannie Mae’s recent addition of “trended data” to its underwriting process. Trended data offers “dynamic perspective,” according to TransUnion, to mortgage lenders who have been limited to reviewing only “static” information—a credit card balance, for example, does not reveal the habits surrounding the balance.
 
The results of the study indicate the use of trended data in credit reports could be a boon for the tens of millions of first-time homebuyers expected to enter the market, qualifying them for more favorable mortgage terms. The potential difference in cost of a 30-year $200,000 mortgage, TransUnion illustrates:
 
Super Prime
Interest Rate: 3.75 percent
Monthly Payment: $926
Total Interest Paid: $133,443
 
Near Prime
Interest Rate: 4.25 percent
Monthly Payment: $984
Total Interest Paid: $154,197
 
Subprime
Interest Rate: 8 percent
Monthly Payment: $1,458
Total Interest Paid: $328,310
 
“Our projection of millions of first-time homebuyers comes at a time when consumers may see increased benefits from the use of trended data in the underwriting of Fannie Mae loans,” said Steve Chaouki, executive vice president, head of the Financial Services Business unit at TransUnion, in a statement on the study. “Through the use of trended data that allow lenders to view a consumer’s payment behavior over a period of time, we believe many consumers could qualify for better loan rates—possibly saving them tens of thousands of dollars.”