Millennials are taking advantage of refinancing options and falling mortgage rates, as Ellie Mae’s latest Millennial Tracker states that the average 30-year note rate for millennials declined to 4.61% in April.
April’s rate is a slight decrease from 4.75% in March, and the percentage of refinance loans increased 4% month-over-month, rising from 11% in March to 15% in April, which is the highest share since February 2018.
“Interest rates continued to drop in April and millennials jumped on the opportunity to refinance,” said Joe Tyrrell, EVP of Strategy and Technology at Ellie Mae. “The significant drop in time to close shows homebuyers were motivated to close refinances while rates were low, and that Millennials are showing increased maturity as a homeowning demographic. On top of external factors, an increased investment in technology by many lenders is creating a more efficient mortgage process.”
Ellie Mae reports that interest rates for Millennials on Conventional, FHA, and VA loans all decreased in April. Rates on Conventional loans fell from 4.7% in March to 4.55% in April, FHA rates decreased from 4.84% in March to 4.71% in April, and VA loans dropped to 4.21% in April.
All three loan categories saw a rise in refinances in April compared to March. The biggest increase was in Conventional loans, which rose to 17% in April from 13% in March. Refinances from FHA loans increased from 5% to 6% and VA refinances also saw a small increase to 28% from 27%.
Also, loans of all types closed in 39 days, which is the shortest period recorded since February 2015. Ellie Mae states the decrease in time to close was caused by a six-day decrease in closing for refinances, which closed faster than purchase loans for the first time since March 2016. Refinances closed in 36 days compared to 38 days for purchases.
The reports adds that 69% of all loans closed in April were conventional, 26% were FHA and VA, and “other loans,” accounted for 2% and 3%, respectively.
A survey last month from SunTrust found that Millennials are eager to enter the housing market, as 48% of millennials who been married say they, or their spouse, owned a home before marriage.