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Refinance Share Among Millennials Hits All-Time High

Refinances accounted for 33% of all loans closed by millennials in September—the largest share of refinance activity since Ellie Mae began tracking data in 2016. 

The share of millennials refinancing rose 8% month-over-month as the average interest rate on 30-year fixed-rate mortgages fell to 3.91%. Ellie Mae reports that the share of purchase loans fell from 74% to 66% in September. 

“Throughout 2019, we’ve seen millennials refinancing in order to take advantage of low interest rates and in September about one out of every three loans closed by this demographic was a home refinance, the highest share we’ve seen since we launched the Millennial Tracker in January 2016,” said Joe Tyrrell, COO at Ellie Mae. “Lenders have done a great job educating millennials on recognizing refinance opportunities, and as a result, this demographic has been able to lock in historically low rates. Going forward, we’ll be keeping a close eye on how these rates impact millennials looking to make a home purchase as well.”

Conventional loans witnessed its share of refinances grow 11% month-over-month to 40%, refinances increased 10% for VA loans to 48, and FHA loans saw its share of refinances fell just 1% to 10% of total closed loans. 

The average interest rate for all loan types fell below 4% for the first time since November 2016. Millennials, on average, received interest rates of 3.90% for conventional loans, 3.52% for VA loans, and 3.94% for FHA loans. 

The time to close all loans for millennials was unchanged at 42 days. Ellie Mae said the average age of millennial homebuyer was 30.6-years-old in September, which is the highest average age since January 2019.

Los Angeles, California, had the highest share of millennial refinances at 57%. Chicago, Illinois, reported the highest increase—growing from 29% to 41%. 

AEI Housing Center previously reported that Pittsburgh, Pennsylvania, was the most affordable metro for the first-time homebuyers in 2018, with a first-time buyer (FTB) ratio of 2.4. 

The report states that across the 50 metros studied, the average FTB ratio was 3.3, which means first-time buyers spent 3.3 times the household income to purchase a home. 

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.
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