Ellie Mae: Millennials moving toward conventional loans
Still rely heavily on FHA
More Millennials are starting to move towards conventional loans, and away from FHA-backed loans, bringing the average FICO score for Millennial borrowers up slightly, according to Ellie Mae, a provider of software solutions and services for the residential mortgage industry.
The percentage of conventional loans among Millennials increased slightly from 61% in June to 62% in July, according to the latest report from the Ellie Mae Millennial Tracker. As part of this shift, FHA loans decreased to 35% of total loans in July, down from 37% the month before.
The Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers.
The average FICO score also continues to improve, up one point in July to 725, driven by the shift to conventional loan products. The average FICO score for those using conventional products was 749, versus 691 for those using FHA.
“As the percentage of conventional loans increases, we see a corresponding uptick in the average FICO scores,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy.
“The percentage of conventional loans has increased for the past two months, from May with 60% of all closed loans being conventional, to July which was at 62%,” Tyrrell said. “During that same time period the average FICO score increased from 722 in May to 725 in July.”
“However, FHA loans remained a popular loan option among millennial borrowers with FHA loans representing 35% of closed loans for millennials while amongst the entire age population they represented 23%,” he said.
Women are listed as the primary borrower on 32% of loans. Of those, 39% were married and 61% were single.
Women find it harder to than men to obtain a mortgage, even though Urban Institute’s Housing Finance Policy Center just released a new study proving what we already know to be true: women are better at paying their mortgages than men.