Lower interest rates in January saw more millennials opting to refinance their loans, according to Ellie Mae's Millennial Tracker.
The monthly report, which focuses on mortgage applications by millennials, noted that refinances by this group of borrowers accounted for 13 percent of all closed loans, the highest percentage since February 2018. The report tracked a similar trend seen in Ellie Mae's Origination report that saw refinances rising to 35 percent of all closed loans in January, among all age-groups.
"With average interest rates slightly falling in January, millennials took advantage of refinancing opportunities," said Joe Tyrell, EVP of Strategy and Technology at Ellie Mae. "While we continue to see millennials enter the housing market and exercise their purchase power, the uptick in refinances may indicate maturity among this generation who previously purchased a home and are looking for an opportunity to take advantage of lower monthly interest rate payments."
Breaking up the applications by loan type, the report noted that refinances also made up a larger share of each type of loan in January. While refinances for conventional loans rose to 14 percent from 11 percent in December, FHA refinances rose from 6 percent to 7 percent. VA refinances also increased to 35 percent in January from 27 percent in December.
Looking at the profile of the typical millennial refinancing their mortgage, the report indicated that the primary borrower refinancing their home was 33 years old with a FICO score of 728. Sixty-six percent of those who refinanced their home were married, while 33 percent were single. The majority of primary borrowers who refinanced were male.
Despite the increase in refinance, more millennials also entered the market in January. The share of conventional loans increased to 69 percent of all closed loans, while FHA loans to millennials held steady at 27 percent, according to the report.
In January, Warrensburg, Montana; Somerset, Pennsylvania; Ottumwa, Iowa; Minot, North Dakota; and Williston, North Dakota were the top five markets for millennial borrowers.