Interest rates for home loans have dipped in recent months and recent data from Ellie Mae shows they decreased by 3.11% in August from the previous month.
This is the lowest drop in interest rates since Ellie Mae began tracking data on fluctuating rates. This recent decline has led to an uptick in refinances for millennial homeowners. In August, “refinances climbed to 40% of all closed loans for millennials,” which is a 2% increase from the month before.
Refinances made up 48% of conventional loans in August, an increase from 46% from the previous month. This shows an even greater increase from August of 2019, when refinances accounted for 29% of closed conventional loans.
August data also shows that days-to-close for all loans rose to 47 days for older millennial homeowners between the ages of 30 and 40-years-old. This was at 45 days in July 2020 and 24 days the prior year. Time-to-close on refinance loans specifically went up by one day, month-over-month, to 53 days this past August. This is 11 days longer than the days-to-close for the same time period last year.
For younger millennials between the ages of 21 and 29, the time-to-close in August was 44 days overall and for refinance loans, days-to-close was at 52 days. Refinance loans made up 20% of all closed loans among younger millennials that same month.
Ellie Mae—which has been tracking loans among older millennials as well as younger millennials—has also found that older millennials are paying slightly higher interest rates than their younger counterparts. In August, older millennials paid interest rates of 3.105%, on average, whereas younger millennials paid average interest rates of 3.087%.
Both of these rates are historically low and millennials are taking advantage of the opportunity. The share of refinance loans increased for both older and younger millennials during the month of August.