Continued limited housing inventory has raised the competition for home buying amongst Millennials, who are buying new homes in record numbers. According to Ellie Mae's latest Millennial Tracker survey, 89% of mortgage loans made to Millennial borrowers during the month were for new home purchases. This is up one percentage point from the month prior, and the highest percentage since May 2017.
“Most Millennials are buying a house because there are major changes happening in their lives such as starting a family, getting a new job, or because they’ve decided that they want to build equity and stop renting,” Ellie Mae Executive Vice President of Corporate Strategy Joe Tyrrell said in a statement.
Interest rates climbed from the prior month’s 4.63 to 4.73% in April, which is the highest rate since Ellie Mae began tracking Millennial loan data in January 2014. Although interest rates rose, the average Millennial loan amount of $192,055 in March fell to $188,171 in April, according to the report.
Conventional loans represented 67% of all closed loans to Millennial borrowers, while Federal Housing Administration loans remained unchanged from 29% in March. Millennial Veterans Administration purchase loans represented 79% of all VA closed loans in April, consistent from March and an increase from 66% in February.
The Ellie Mae Millennial Tracker also discovered that the average age of millennial borrowers is 29.9, and males were listed as the primary borrower on 62% of closed loans. Furthermore, the average FICO score for millennial borrowers is 721, and that the Midwest continues to have the most popular markets for Millennials.
“We believe Millennial home purchases will continue to climb this summer and while interest rates may slightly impact the size of homes borrowers can get for their money, we don’t foresee it impacting their desire to buy, " Tyrell said.