Millennial mortgages close rapidly as low rates raise purchasing power

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Millennials closed mortgage loans at their fastest pace in four years as lower interest rates pushed up purchasing power and incentivized them to pull the trigger, according to Ellie Mae.

The average 30-year note rate fell to 4.75% in March, down from 4.85% in the prior month to its lowest percentage since April 2018. Over this same period, loan closing times fell to 40 days, the shortest average since February 2015.

Millennial refinances closed 11 days faster in March than in the previous month, and purchase mortgage closing times sank to 39 days from 45. About 87% of loans closed to millennials in March were purchase, while 11% were refinances.

"Home buying tends to pick up in the spring and lower interest rates are intensifying this trend among millennials," Joe Tyrrell, executive vice president of strategy and technology at Ellie Mae, said in a press release. "Likewise, lower interest rates are providing increased purchase power to millennials, allowing them to participate in a very competitive home buying market."

By loan type, 68% of millennial mortgages in March were conventional, 28% were Federal Housing Administration loans, 2% were Department of Veterans Affairs loans and 3% accounted for other types of mortgages, according to Ellie.

For FHA loans, purchases rose to 95% in March from 89% in February, while the purchase share for conventional loans ticked down a point to 85%.

Millennial average FICO scores dipped slightly, declining from an average of 723 to 720 month-over-month in March.

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First time home buyers Purchase Refinance Purchasing power Mortgage rates Housing affordability Housing market Ellie Mae