Millennials reaped the most benefits from this year’s low interest rate in August, as the average rates on home loans obtained by the generation fell to 3.76% for the month, the latest Ellie Mae Millennial Tracker data found.
Ellie Mae, which offers clients loan origination software, launched the tracking tool in May of this year to give lenders insight into the latest and largest generation of homebuyers, Millennials. The data used in the tracker is from a sample of 66% of all closed mortgages going back to 2014 that were initiated on Ellie Mae’s Encompass-all-in-one mortgage management solution.
The average rate of 3.76% shows a steady decrease from a high of 4.12% in February.
Looking at the overall market, the 30-year fixed-rate mortgage is currently hovering around 3.42% and has stayed under 4% for all of 2016, Freddie Mac’s most recent weekly mortgage rates survey found.
As the home loan rate for Millennials decreases, the average loan amount to Millennial borrowers increased to $181,326, growing from July’s average of $180,413. The average loan amount for both conventional and FHA loans also increased, to $203,884 and $172,667, respectively.
“In August, Millennial borrowers enjoyed the lowest average interest rates we have seen all year,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “And we are seeing average loan amounts creep up for conventional and FHA loans as millennials take advantage of these low rates.”
The report also noted that the average FICO score for Millennial borrowers remained stable at 725 in August after rising the past few months.
Tyrrell also addressed this change back in the July report, citing that Millennials are starting to move towards conventional loans, and away from FHA-backed loans, bringing the average FICO score for Millennial borrowers up slightly.
This trend continued in the August report, with the percentage of Millennial conventional loans rising to 63% of total closed loans, up from 62% in July.
Meanwhile, FHA loans represented 35% of all closed loans in August, down from both June and May’s 37% share. The average debt-to-income ratio rose to 24/36. Loan-to-value increased to 88 in August.