Mortgages Become Riskier for First Time Buyers

The mortgage risk for first-time home buyers was higher in April 2015 compared to the same month of 2014. This is shown by the increase of the First-Time Buyer Mortgage Risk Index (FBMRI) of the American Enterprise Institute’s International Center on Housing Risk.

FBMRI was 15.28% in April of this year compared to 14.38 percent in the same month a year ago. It was 6.5 percentage points higher compared to the index measuring the risk for repeat home buyers.
Both the First-Time Buyer Mortgage Risk and Mortgage Share indexes of AEI are compiled with the use of monthly data nearly 100 percent of all home purchase mortgages guaranteed by the government. The result is large reduction in the chances of error.

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The share of first-time home buyer loans in the volume of government-backed primary owner-occupied home purchase mortgage loans was 57.9% in April 2015. It was higher compared to the same month of both 2014 and 2013. In April 2014, the share of such loans was 56.8% while in April 2013 it was 57.4%. On a month-over-month basis, there was an increase of 0.9 percentage points from March 2015.

The estimated combined First-Time Buyer Mortgage Share Index (FBMSI) was also higher in April 2015 compared to the same month of 2014 and 2013 respectively. The Combined FBMSI shows the share of first-time home buyer loans in the volume of both government-backed and private mortgages. It was 52.2% in April 2015 up from 51.2% in April 2014 and 51.8% in April 2013.

The number of primary owner-occupied purchase mortgages taken out by first-time home buyers in the period from November 2014 to April 2015 was 577,000, according to AEI’s estimate. It was 8.5% higher compared to the period from November 2013 to April 2014. During this period, the number of such loans taken out by first-time home buyers was 532,000.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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