Home purchase loans are making up an increasing share of loans made to millennials, according to Ellie Mae’s Millennial Tracker. Purchase loans accounted for 87 percent of loans made to millennials in February, up from 85 percent in January.
Refinance loans accounted for 11 percent of millennial loans in February, down from 13 percent in January. The average loan amount was $194,189.
“The percentage of purchase loans is on the rise with millennials continuing to enter the homebuying market for their first or maybe even second purchase,” said Joe Tyrrell, EVP of Strategy and Technology for Ellie Mae.
Conventional loans made up 68 percent of all loans made to millennials in February, down slightly from a month earlier. FHA loans accounted for 27 percent of millennial loans, and 2 percent of millennial loans in February were originated through the Veterans Administration (VA).
The average time to close a millennial loan in February was 42 days, two days shorter than a month earlier. However, it took longer to close a conventional loan in February than January—46 days, up from 44 days a month earlier. In fact, it took longer to close a conventional loan in February than any time since January 2017, according to Ellie Mae.
“The increase in days-to-close we saw in February is relative to the percentage increase in purchases versus refinances, as purchases typically take longer to close,” Tyrrell explained.
Among conventional loans, purchase loans took an average of 44 days to close, while refinance loans took an average of 53 days. Purchase loans experienced a longer timeline by two days over the month, but the time for refinance loans grew by nine days.
FHA loans took an average of 42 days to close in February, two days shorter than a month earlier. VA loans took an average of 59 days to close, six days longer than the previous month.
FICO scores for millennial borrowers rose one point over the month of February to an average of 723. The average score for conventional purchase loans was 745. The average for FHA loans was 740, and for VA loans, the average score was 740.
The Ellie Mae Millennial Tracker consults data from 80 percent of all closed mortgage loans, focusing on closed loans for borrowers born between 1980 and 1999.