Will rising interest rates affect va loans for first-time buyers?

The VA loan is an important financing tool for VA-eligible borrowers to realize their homeownership dream. In 2021, one in two VA borrowers was a first-time homebuyer (FTHB).

Mortgage rates hit record lows last year. The average VA FTHB interest rate was 2.90% and the quarterly volume of the FTHB VA purchase loan remained elevated. In 3. In the first quarter of 2021, it reached a record low of more than $19 billion for the quarter, up $174 million from the 3. Quarter 2020. And since 2017, VA purchase loans have been around 200.000 to 230.000 VA-eligible first-time homebuyers helped become homeowners per year.

This corresponds to an average of 56 billion U.S. Dollars in mortgage originations per year. In 2021, the VA-FTHB segment reached an estimated $69 billion in U.S. Ginnie mae loan-level disclosure data, updated through january 2022, analyzed in govloansvision.

What will the year 2022 look like for the borrowers of the VA FTHB??

Our scratch-pad calculations tell us that if interest rates continue to rise in 2022, we will see a lower VA FTHB volume of around 58 billion FTHB purchase volume at 70 billion US dollars in 2022.

Figure 1: forecast of VA FTHB purchases


Lenders can learn about veterans with service-connected disabilities in their communities and markets and look for ways to provide quality education and financing in an efficient and transparent manner.

We expand the scope to include all veterans within a given age group, regardless of disability status, and estimate that about 4 million veterans are under age 50 and have a median household income of 91, according to the march 2021 ASEC.Have 400 USD. (SOURCE: polygonresearchcpsvision].

Figure 3:distribution of veterans 50 years old or younger by state

Figure 3-1

This statistical distribution of veterans (age 50 or younger) by state in figure 3 closely follows VA FTHB mortgage origination data found in ginnie mae's loan-level disclosure data. The top 5 states for veterans who were first-time homebuyers and used VA purchase loans to buy homes were TX, FL, VA, CA, and NC – figure 4.

Figure 4: top 5 states by number of VA FTHB borrowers


What was the credit profile of VA first-time home buyers??

In 2021, the average VA first-time home buyer had a credit score of 710, a DTI of 40%, and took out 99% LTV loans totaling 319.000 at 2.90% (see figure 5). VA FTHB borrowers had higher credit scores and lower DTI than FHA FTHB borrowers. In the VA community reviewed, the average VA purchase borrower (both FTHB and repeat) as a controlled sample had a credit score of 717 and a DTI of 40.7% and took out 98% LTV loans totaling 394.USD 000 at 2.69% on.

Figure 5: first-time home buyers in 2021


Given the strong creditworthiness of VA borrowers and first-time homebuyers in particular, and given the size of the VA FTHB loan market – an estimated $58 billion to $70 billion – lenders and businesses may view VA loans as an excellent business opportunity in 2022.

But with this opportunity comes a great responsibility-our active duty to provide the best service to veterans and their spouses and to protect them from abusive lending practices. Understanding the VA-eligible borrower and the financing tools to meet their credit needs is not only an ethical matter, but also a necessary professional skill to achieve scale and profitability.

Data: VA first-time home buyer (FTHB) borrowers are the actual reported data found in ginnie mae loan-level disclosure records containing more than 800 million lines and modeled in govloansvision by polygon research.

Veteran analysis is extracted from cpsvision, which includes monthly CPS data through december 2021, the march 2021 ASEC, and the august 2020 veteran supplement.

Statistical records of over 325 million people and over 127 million households. – the forecast is updated monthly.

Nathan knottingham is COO of vetted VA.

This column does not necessarily reflect the views of the editors of realtrends and its owners.

To contact the author of this story:
nathan knottingham to [email protected]

To contact the editor responsible for this story:
sarah wheeler at [email protected]

The post will rising interest rates affect VA loans for first-time buyers? First appeared on housingwire.

Like this post? Please share to your friends:
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: