The Des Moines, Iowa-based mortgage and real estate research firm ""iEmergent"":http://www.iemergent.com has updated its 2009 first-time homebuyer loan volume forecasts in light of the new federal tax credit.
The company projects that home loans made to first-time buyers will tally 955,000 this year and generate $133 billion nationwide. iEmergent says lending to first-timers will represent approximately 22.3 percent of all purchase units and 19 percent of all purchase dollars.
If the tax credit for first-time homebuyers is expanded, as several lawmakers have proposed and many industry groups are advocating, iEmergent anticipates a higher projection for these transactions. In addition, the company warns that if the tax credit is expanded but the deadline is not extended, lenders should be prepared for a sizeable spike in volume before year-end.
Dennis Hedlund, founder and president of iEmergent, said, ""First-time homebuyer lending is crucial to future lending competition. To maximize their opportunities, lenders must understand the unique details of the first-time homebuyer lending landscapes in each of their local markets. Then they must use this knowledge to tailor their lending strategies and expand their education, verification, and documentation efforts to better serve [this] segment.""
Hedlund continued, ""Since the total purchase volume outlook for 2009-2010 remains relatively weak, first-time homebuyer lending overall will represent a greater portion of total purchase lending than in the past. However, as local markets seek a new balance point in housing and home finance, the percent of total purchase volume represented by the first-time buyer segment will retreat from recent short- term bursts.""
According to iEmergent, information such as its first-time homebuyer purchase forecasts can help lenders better quantify market opportunities that match their market presence, resources, and capabilities.
iEmergent synthesizes a range of historical market, demographic, and housing metrics to determine the number of potential first-time homebuyer households within local communities. Each market’s long-term mortgage generation calculator - the Purchase Mortgage Conversion Rate (PMCR) - is applied to produce an initial estimate of potential first-time buyer volume. This volume is then adjusted for other factors, such as unemployment, foreclosure rates, home affordability, and inventory trends.