A changing population mix may spell trouble for the mortgage industry as the United States approaches the millennium, some analysts believe.

"Lenders have to get used to the idea of a lower demand for housing, and lower originations volume," said Nima Nattagh, a market analyst with TRW Redi Property Data of Anaheim, Calif.

According to figures compiled by TRW Redi from Census Bureau data, the percentage of the population in the 25-to-34 age group is going to drop significantly in the next four years. Nationally the drop will be about 8% drop, and declines will approach 20% in some northeastern states.

Historically, most first-time homebuyers have been 25 to 34 years old. Consequentially, "the first-time buyer is going to decline in significance in the near future," Mr. Nattagh said.

This shrinking pie is going to mean an increase through the year 2000 in industry consolidation and in the number of players driven out of the business, Mr. Nattagh said.

Other observers agree that the prime buying group is shrinking, but they point to mitigating factors, including rising immigration. One important caveat, however, is that new immigrants often rent rather than buy, Mr. Nattagh said.

Another mitigating factor is that people are getting married, having children, and purchasing their first homes later and later. In fact, according to the Census Bureau, the average annual rate of growth of in the number of households has decreased in the last 20 years - from 2.4% in the 1970s to 1.1% in the 1990s. Many people continue to live alone, in rental units, for longer periods.

"The increase of the average age at which people purchase first homes will moderate the declining 25-to-34 population," said Rob Valletta, regional economist with the San Francisco Federal Reserve Bank. The degree of that moderation is not clear, he said.

Tom Cunningham, regional economist with the Atlanta Federal Reserve Bank, contends that the dearth of 25-to-34-year-olds means less to the housing market than the current position in the cyclical economic climate of the nation.

"For this business cycle, housing starts peaked in 1994" after five years of pent-up demand, Mr. Cunningham said. "We're not likely to see the same growth again for a long time, but that depends more on cyclical figures than demographics," he said.

He also points to steadily rising age of first-time homebuyers as a reason lenders should avoid panicking.

Nonetheless, as the 25-to-34 age group shrinks, the over-45 population is going to increase across the board, leaving lenders looking for ways to pinpoint usage of the equity that the older generation already has in its homes.

Niche marketing will be the key to lender survival, Mr. Nattagh asserts, and the recent expansion of reverse mortgages is one good example. These products, popular with long-time homeowners, let them use funds they have paid into their first mortgage.

A focus on immigrants may also help to offset losses lenders may be feeling, Mr. Nattagh said. He points to Countrywide Credit Industry's recent campaign to target the Hispanic market as a successful example.

Additionally, certain areas of the country stand to gain more than their share of 25-to-34-year-olds from improving economic conditions. Members of that age group tends to be less sedentary, often migrating to a new region as jobs become available.

The Mountain States will most likely benefit from this migration in the next four years, Mr. Nattagh says. The Southeast is also looking for above- average population and economic growth, Mr. Cunningham said. "It's likely that the Southeast will outperform the nation," he said. "What that says about the United States' overall economic performance is questionable."

Migration from the Northeast, where jobs are scarce, will fuel growth in these regions.

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