The refinance share for all loans closed to millennial homeowners in February was 34%, which is tied for the highest share since Ellie Mae began tracking this data in 2016.
Conventional loans represented 75% of all loans closed by this group for the month. The refinance share rose to 41% as average rates for this loan type fell to 3.86% from 3.98%.
The Ellie Mae Millennial Tracker now divides millennials into two groups—older millennials (between 30 and 40-years-old) and younger millennials (between 21 and 29-years-old). Older millennials accounted for 41% of all loans closed for millennials, compared to just 18% for younger millennials.
Younger millennials saw their average interest rate on all loans fall to 3.83% from 3.9% month-over-month. The average rates for older millennials fell monthly to 3.85% from 3.95%.
“Economic impacts due to coronavirus (COVID-19) played a role in lowering interest rates in February and millennial homeowners were quick to take advantage and refinance their mortgages,” said Joe Tyrrell, Chief Operating Officer at Ellie Mae. “While rates are currently favorable for consumers, we’re closely monitoring how COVID-19, and the resulting rate cut from the Federal Reserve, will impact every step of the homebuying and refinancing process and, in turn, the mortgage finance industry. Lenders who have invested in the requisite technology will be better positioned to work with buyers and owners who are increasingly interested in taking these processes virtual.”
Ellie Mae also found the time-to-close for refinances dropped 12 days month-over-month, decreasing to 38 days from 50 days. Times to close on all loans by millennials in February dropped from 47 days to 41 days, on average.
Refinances may continue to grow as Freddie Mac reported that the average 30-year fixed-rate mortgage dropped to 3.33% for the week ending on April 2.
“Mortgage rates have drifted down for two weeks in a row and that drop reflects improvements in market liquidity and sentiment,” said Sam Khater, Freddie Mac’s Chief Economist. “While the market has stabilized relative to prior weeks, homebuyer demand has declined in response to current economic conditions. The good news is that the pending economic stimulus is on the way and will provide support for both consumers and businesses.”
The prior weeks’ average was 3.50% and last year it was 4.08%.