The first-time homebuyer market has seen record-breaking growth in the third quarter of 2020.

First-time buyers purchased 700,000 single-family homes in Q3, up 15.7% from a year ago, according to a report released Wednesday by Genworth Mortgage Insurance. They represented 39% of single-family home sales and 58% of all purchase mortgages.

“The third quarter of 2020 was a remarkable quarter for both the housing market and the first-time homebuyer segment, with the most first-time homebuyers purchasing homes in 20 years, and the highest level of home sales since 2006,” said Genworth Chief Economist Tian Liu.

The report also revealed that the number of first-time homebuyers jumped by 16.3% quarter over quarter to a seasonally adjusted annual rate of 2.55 million – the fastest pace on record.

Historically low mortgage rates played a massive role in easing housing affordability. Rates for entry-level buyers edged down from 3.36% in June to 3.01% in September, the lowest interest rate for mortgages on record. This led to a 4% cut in mortgage payments in Q3, while higher home prices pushed mortgage payments by 3%.

“The housing finance system continued to perform well during the third quarter to ensure access to credit for first-time homebuyers,” Liu said. “The COVID-19 pandemic has stressed the housing finance system in three ways: more hurdles to buy and sell homes; tighter credit availability due to increased credit risk – both actual and perceived; and lack of mortgage industry capacity due to rising demand for refinancing.”

However, Liu explained that credit availability for potential first-time homebuyers can be especially vulnerable since they still rely heavily on low-down-payment mortgages for financing.

Overall, 577,000 entry-level homebuyers used some form of low-down-payment mortgage products, accounting for 82% of all first-time homebuyer purchases in the third quarter. Private mortgage insurance (PMI) also grew in popularity. It was used by 285,000 first-time buyers, which is a 34% increase from a year ago. Meanwhile, FHA loan programs financed 195,000 first-time homebuyers during Q3, up 8% since last year.

The repeat buyer market also posted strong growth in the third quarter, increasing 17% year over year to 1.08 million units. In the first three quarters of 2020, repeat buyers purchased a total of 2.55 million homes.

“The pandemic has increased preference for homeownership as homes are serving as shelter, office, and classroom. Lower interest rates have made homes more affordable, while reduced spending on personal services, travel, and leisure has increased the share of expenditure available for housing. A shift in housing preference among existing homeowners is driving repeat buyer activities as they look for different locations and different home features,” Liu said.