Ellie Mae’s latest Millennial Tracker [1]revealed that purchase transactions for millennials dipped for the second-consecutive month, accounting for 74% of all closed loans in August.
The average interest rate for millennials on 30-year notes dipped to 4.059% for the month, which is the lowest rate since December 2016, causing refinances to increase 25% of all loans closed.
“We are seeing Millennial homeowners who may have purchased homes only a few years ago quickly taking advantage of the industry’s extremely low interest rates,” said Joe Tyrrell, COO at Ellie Mae. “We will also be watching to see if the increased purchase power from a lower rate environment enables some Millennials to make the leap into homeownership as we enter the fall homebuying season.”
Conventional refinance loans rose to 29% in August, which is up from 27% the previous month, while conventional purchase loans fell to 69%—down from 72% in July and 82% in June. VA refinances increased to 38%—a month-over-month increase from 34%, as purchases fell from 66% to 62%, respectively.
FHA percentages varied slightly from the prior month, with purchases down to 91% from 92% from the month before. Refinances through FHA loans increased from 8% to 9%, which is the highest percentage since February 2019.
Ellie Mae also found that the time to close for all loans increased slightly from 41 days in July to 42 days in August. Time to close on refinance loans was unchanged from the month prior at 42 days. Purchase loans also remain unchanged for the third-consecutive month at 40 days.
The average age of the millennial homebuyer stayed at 30.5-years old, which is the highest average age since November 2015. Additionally, the average FICO score for millennial borrowers stayed at 728—the highest average since May 2015.
Price, though, remains an obstacle for many millennials [2], as a study by MoneyWise detailed the metros most unaffordable for millennials, and found Oxnard-Thousand Oaks, California, to be the most unaffordable market for millennials.
Millennials can afford just 2% of the homes listed in the metro, including nearby Ventura. The average home price in the metro is $522,000.