Millennials continue to shape the market as purchase share rises
A larger percentage of newly originated mortgages to millennials shifted toward purchase loans as interest rates stayed low, according to Ellie Mae.
The purchase share continued increasing in December off the momentum of the preceding months, climbing to 72% from 68% the month earlier. However, it's still way behind the 88% share from December 2018. After closing the gap through the summer and fall, the refinance share fell to 27%.
"The refinance boom potentially ending is a major topic of discussion in the industry at the moment, but the reality is that if we take a step back and look at the last year, overall the market is still favorable for homeowners looking to refinance and millennials considering purchasing their first home," Joe Tyrrell, chief operating officer at Ellie Mae, said in a press release.
It took 43 days to close a loan, which held steady from both the month and year prior. Conventional mortgages accounted for about 71% of completed loans to millennials in December, while 24% were Federal Housing Administration loans. Mortgages guaranteed by the U.S. Department of Veterans Affairs accounted for 2%, while other unspecified types of financing constituted the remaining 3%.
"Whether millennials are refinancing more or increasing their purchase activity, the reality is that this demographic plays a central role in shaping the market," Tyrrell continued. "Lenders can best set themselves up for success by understanding that, throughout the mortgage process, millennials want automation and human touch working in concert to create the best customer experience possible."
The average millennial FICO score jumped to 728 from December 2018's 721, but dropped a point from November. At 30.4 years, the average age for millennial borrowers increased from 29.5 from the year before and while remaining the same month-to-month.
Married individuals represented approximately 55% of loans closed, while 45% of primary borrowers were single. Nearly 59% were male, 31% female and 10% unspecified. The average loan amount jumped to $206,572 from $193,624 year-over-year and $205,682 from November.