In May, 90 percent of closed mortgages to young Americans were for new home purchases, up from April's 89 percent, and January's annual low of 81 percent, the report indicated.
Conventional loans, which represented 69 percent of all loans closed in June, remained the most popular among millennials, the tracker indicated. Though FHA loans in June represented 20 percent of closed loans in June for borrowers of all ages, Ellie Mae said that the number was significantly higher—27 percent—among millennial borrowers. However, it was one percentage point down from the prior month.
"As it remains a competitive purchase-centric market, we will continue to keep a close eye on the purchase trends amongst millennials," said Joe Tyrell, EVP, Corporate Strategy at Ellie Mae.
The report said that across all loan types, it took millennial homebuyers 42 days to close on their loans in June, a day longer than March, April, and May. Getting a purchase loan took an average of 41 days and refinance loans to this age group took 45 days. "This new generation of homebuyers wants the capability of an on-demand mortgage, and we are working to provide borrowers a convenient and secure digital mortgage offering that makes the home buying process a seamless experience," Tyrell said.
Midwest housing markets were a favorite with millennials, the report indicated, in terms of top markets of loans closed by millennials. They included Clarksburg West Virginia where 65 percent of the total loans closed in June was by millennials, Watertown South Dakota; Boone, Iowa; and Dickinson, North Dakota.
Millennials also scored high on credit with the average millennial borrower FICO score across all loan types rising to an average of 723, up from 721 from March to May, Ellie Mae reported. For purchase loans, the report indicated, the average FICO score was 746 for a conventional loan, 681 for an FHA loan, and 744 for a VA loan.
Lending to young Americans comes with its own set of challenges and opportunities to provide a seamless, efficient, and digital-friendly mortgage experience to them. On August 23, join MReport's complimentary webinar, presented by Ellie Mae, to hear experts on business strategies to lend to the large, and at many times underserved, market of millennial home buyers, who have emerged as the largest and most active group of buyers in the market. Click the link below to register.