Quelling rumors that Millennials don’t want to buy homes, a new report from Ellie Mae shows that they’re not only buying homes, they’re even to the point they want to refinance.
The overall number may still be small, but it’s growing. According to the latest Ellie Mae Millennial Tracker report, refinances by Millennial borrowers accounted for 20% of all closed loans in September, up from 17% of all closed loans in August.
Now compared to all of Ellie Mae’s loans, regardless of age, the data showed that 54% of closed loans were purchases and 45% were refinances.
The Ellie Mae Millennial Tracker focuses on Millennial mortgage applications during specific time periods, and the tracker is a subset of its Origination Insight Report. Ellie Mae defines Millennials as applicants born between the years 1980 and 1999.
“As the average rate on home loans continues to decline, we are seeing Millennials with more purchase power, indicated by the average loan amount increase,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae.
“We’re also seeing a slight uptick in the number of refinances in September, indicating maturity among those millennials who previously purchased a home and are looking for an opportunity to lower the cost on their existing mortgage.”
As far as loan amounts, the total average loan amount increased to $184,179, up from an average of $181,326 in August, the average loan amount for conventional loans decreased slightly to $203,780, down from an average of $203,884 in August, and the average FHA loan amount increased to $174,015, up from an average of $172,667 in August.
And just as the home total loan amount varied based on the loan type, so did the time to close the loan.
Ellie Mae stated that the overall time to close loans crept up in September, taking 47 days for all loans to Millennial borrowers to close in September, on average, up from 46 days in August.
Broken up, conventional loans took an average 46 days to close and FHA loans took an average of 47 days.
Compared to all of Ellie Mae’s loans, the average time to close all loans increased to 48 days in September, up from 46 days in August.
Other key facts from the report include that the average FICO score for Millennial borrowers increased to 726 in September, while the average rate on home loans continued declining to 3.728% in September.
Looking at the latest mortgage rate report from Freddie Mac, the 30-year fixed-rate mortgage currently sits at 3.54%.
The majority of Millennials opted for a conventional loan, which made up 64% of total closed loans in September, up from 63% the prior month.
Meanwhile, the share of FHA loans decreased to 33% of all closed loans, down from 35% in August. This is a change from FHA’s 37% share not too long ago this year.