Millennials are now closing loans at the fastest pace since March 2016, according to Ellie Mae’s latest Millennial Tracker.
The average time taken to close a loan in February dropped to 44 days. The time it took to close a purchase loan dropped to 42 days, down from 46 days in January, while the time it took to close a refinance loan dropped from 58 days to 52 days during that same time period.
FHA loans followed the same pattern, dropping to 43 days in February, down from 47 days in January. The average time to close VA loans saw the most drastic drop from 57 days down to just 41 days.
“Purchase loans are increasing, indicating that Millennials are continuing to enter the first-time homebuyer market,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy. “In addition, we saw time to close decrease from 49 days in January to 44 days in February, which indicates that our lenders are seeing more efficiency as they embrace mortgage automation.”
Unsurprisingly, as interest rates remain above last year’s levels, purchase originations rose as refis shrank. Purchase originations increased to 86%, up from 84% the month before, as refis decreased two percentage points to 14%.
The share of conventional loans held steady at 61% of loans originated for Millennials while the share of FHA loans increased slightly by one percentage point to 36%.
FICO scores across all loan types continued to fall in February to an average 723, down from 724 the month before. For purchase loans, the average FICO score came in at 747 for a conventional loan, 690 for an FHA loan and 745 for a VA loan.
But perhaps one of the most surprising revelations in the report was where Millennials are buying homes. Texas held the hottest markets for Millennials, and the lion's share of buying occurred in the small towns of Midland, Odessa and Beaumont-Port Arthur. The Beaumont-Port Arthur area abuts Houston, but Midland and Odessa are not near any large metropolitan area and rely mostly on the oil and gas industry.