Millennials take advantage of low mortgage rates
While the refinancing boom took a step back, millennials purchasing power grows in the low mortgage rate environment, according to Ellie Mae.
The purchase share gained momentum in November, climbing to 68% from 65% the month earlier. However, it pales in comparison to the 89% share from the year prior. After closing the gap, the refinance share fell to 31% from October's 34% of millennial mortgages, but the generation still took advantage of historically low interest rates.
"Millennials are well-educated on their options as homeowners and have played a major role in driving the refinance market in 2019," Joe Tyrrell, chief operating officer at Ellie Mae, said in a press release. "Interest rates increasing in November for the first time this year may indicate that the refinance boom has passed its peak, however rates are still relatively low and refinance share is up 21 percentage points year-over-year."
It took 43 days to close a loan, up a day from the year before and holding steady from the month prior. About 73% of mortgage completed in November were conventional, while 23% 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%.
"For millennials, 29 and 30 are prime home buying ages and millions of millennials will reach this marker next year," added Tyrrell. "Millennials expect a balance of automation and human touch in the mortgage process and as their purchasing power continues to grow, it’s important that lenders invest in technology to meet this demographic’s expectations."
The average millennial FICO score jumped to 729 from last November's 722, but dropped a point from October when it reached a four-year high. At 30.4 years, the average age for millennial borrowers fell slightly compared to the previous month's 30.6 years but increased from 29.6 in November 2018.
Married individuals represented approximately 57% of loans closed, while about 43% of primary borrowers were single. Nearly 59% were male, 31% female and 10% unspecified. The average loan amount jumped to $205,682 from $193,173 year-over-year.