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

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.

About Mortgage Monitor

ICE manages the nation's leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and Collateral Analytics' home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

ICE's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://mortgagetech.ice.com/resources/data-reports.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE:ICE) is a Fortune 500 company that designs, builds, and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE's futures, equity, and options exchanges -- including the New York Stock Exchange -- and clearing houses help people invest, raise capital and manage risk. We offer some of the world's largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines, and automates industries to connect our customers to opportunity.

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Source: Intercontinental Exchange

Category: Mortgage Technology

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