An increasing share of Millennials are now leaning toward conventional financing, rather than FHA, and even hit an all-time high in February, according to Ellie Mae’s Millennial Tracker.
About 68% of all mortgage loans in February were conventional, the highest percentage since Ellie Mae began tracking this trend in 2016. FHA loans remained flat from the previous month at 28%, their lowest point since 2016.
Millennials are also increasing their overall share in the housing market as Millennial purchase loans increased to 45% of all closed loans, up from 43% in December. Non-Millennial purchase loans decreased from 57% of all loans in December to 55% in February.
And this is despite rising interest rates, which increased from 4.25% in January to 4.4% in February, the highest recorded since June 2014.
While conventional loans saw a drop in the number of days it took to close, FHA and VA mortgage saw the greatest improvement. Conventional mortgages decreased from 44 days to close in January to 42 days in February.
During that same time period, FHA loans fell from 55 days to 44 days while VA loans fell from 51 days to 42 days. These are also down from 54 and 57 days respectively in December.
Breaking it down by gender, the average male Millennial held a credit score of 725 and took out a mortgage of $199,352. The average female Millennial borrower took out a loan of $189,084 and held a credit score of 723.
“According to the U.S. Census, Millennials are now officially the largest group of homebuyers in the U.S.,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy.
“Despite rising interest rates, we’re continuing to see Millennials exercise their purchase power across the United States as they represent 45% of total closed purchase loans in February,” Tyrrell said. “And with the spring home-buying season now underway, we’ll see if the activity increases for this growing group of homebuyers.”