Even with interest rates going up, millennials are still taking out loans for new homes, according to Ellie Mae. The Ellie Mae Millennial Tracker found that 83 percent of mortgage loans made to millennial buyers were for new home purchases, a two percent increase month over month, but a three percent decrease year over year.
Meanwhile, interest rates have been on the rise. In February, interest rates went up from 4.24 percent to 4.39 percent month over month. While this seems to have pushed some buyers away, with non-millennial purchase loans declining from 57 percent of total closed purchase loans in December to 55 percent in February, millennials have been taking out more mortgage loans. According to February’s data, these loans average around $199,352 for male millennial borrowers and $189,084 for female millennial borrowers.
According to Ellie Mae, these millennials prefer conventional loans over FHA loans, as 68 percent of loans to millennials in February were conventional loans. Ellie Mae notes that this is the highest percentage of conventional loans since 2016, while FHA loans were at their lowest of 28 percent.
The high interest rates haven’t stalled closing times either: millennial homebuyers have been closing in the fastest times in two months. Purchase loans have been closing in an average of 41 days while refinance loans closed in an average of 43 days.
“According to the U.S. Census, Millennials are now officially the largest group of homebuyers in the U.S.,” said Joe Tyrrell, EVP of Corporate Strategy for Ellie Mae. “Despite rising interest rates, we’re continuing to see Millennials exercise their purchase power across the United States as they represent 45 percent of total closed purchase loans in February. And with the spring homebuying season now underway, we’ll see if the activity increases for this growing group of homebuyers.”