Millennials are not afraid of a buyer’s market, according to the February Ellie Mae Millennial Tracker. Despite rising interest rates and high demand for housing, the total number of purchase loans for this demographic rose 4 percent in December 2018 from December 2017. Overall purchase loans accounted for 88 percent of all millennial loans closed.
This is a clear indication that millennials are not shying away from rising interest rates which are now at 5.12 percent on average, the highest since Ellie Mae began tracking this data in 2016. In contrast, refinance rates dropped 5 percent year-over-year, comprising 10 percent of all closed loans in December 2018.
“Many millennials are prioritizing homeownership and rather than being deterred by a tight market, they’re increasingly competing for available homes or moving to areas where inventory is more robust,” said Joe Tyrell, EVP of Corporate Strategy for Ellie Mae.
Millennials have adopted a more progressive lifestyle compared to the baby boomer generation, opting to hold off on traditional things like marriage before buying a home. For example, from 2016 to 2018, 63 percent of borrowers between the age of 20 and 29 were single when they closed their loans. If the housing market is any indicator, millennials are a driving force in today's economy and proving to change traditional trends.
According to the report, millennials are flocking to the metropolitan statistical area of Somerset, Pennsylvania. Also in the top 10 metro areas are Odessa and Midland, Texas; as well as Burley, Idaho; Williston, North Dakota; Fargo, North Dakota-Minnesota; Minot, North Dakota; Casper, Wyoming; Columbus, Indiana; and Dubuque, Iowa.
Men continue to make up the majority of millennial buyers, with 59 percent of total loans going to this group. The loans that millennials are opting for are primarily conventional (69 percent) followed by FHA (27 percent), VA (29 percent), and 3 percent unspecified.
To delve deeper into millennial loan trends, view the full report here.