Millennials are taking full advantage of historically low mortgage rates, causing an increase in refinance activity and times for closing on all refinances increasing in May, according to Ellie Mae’s latest Millennial Tracker.
The report states that closing for all refinances grew from 36 days to 42 days in May. The average interest rates on all 30-year notes for millennials dropped month-over-month from 4.61% in April to 4.53% in May.
“Refinance activity amongst millennials continued to rise as interest rates dropped,” said Joe Tyrrell, COO at Ellie Mae. “Time to close has been trending downward recently, but in May, the volume of activity pushed the mortgage finance industry to a tipping point where it spiked dramatically. As the digitization of the mortgage process continues to evolve, increased automation will help borrowers and lenders close all loan types more efficiently, even during periods of increased activity.”
Closings on conventional loans for refinancing increased six days month-over-month for millennials, reaching 42 days in May, while closing on VA refinances grew to 45 days from 40.
Millennials closed FHA refinances in 41 days in May, which is one day quicker than the month prior.
Ellie Mae states that in the peak of homebuying season, the overall share of refinances for millennials dropped to 14$% in May—a slight decrease from 15% in April.
The share of refinances for FHA loans remained unchanged at 6%, while refinances for conventional loans decreased to 16%, and refinances for VA loans fell to 26% from 28%.
Increased activity of refinances impacted millennials in all major metros in the nation. Time to close on refinances in San Francisco, California, increased five days and refinances took six days longer in Chicago, Illinois.
The report states that the average age of millennial borrowers increased slightly from 30.2-years old in April to 30.3-years old in May. Alos, the average FICO score remained the same at 721. Of all loans closed, 53% were closed by married couples, while 46% of millennial borrowers were single.