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Purchase Loans to Millennials Steadily Increased Even as Interest Rates rose According to Ellie Mae Millennial Tracker™
PLEASANTON, Calif. – June 6, 2018 – Millennial homebuyers across the country exercised their purchase power in April as competition for limited housing inventory continued. Eighty-nine percent (89 percent) of mortgage loans made to Millennial borrowers during the month were for new home purchases, up one percentage point from the month prior, and the highest percentage since May 2017, according to the latest Ellie Mae Millennial Tracker™.
Interest rates also continued to rise in April to 4.73 percent, on average, up from 4.63 percent the month prior. This is the highest interest rate recorded since Ellie Mae began tracking Millennial loan data in January 2014.
As interest rates crept up, average loan amounts to Millennials fell. The average amount was $194,300 in February, $192,055 in March and $188,171 in April.
“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,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “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.”
Overall, conventional loans represented 67 percent of all closed loans to Millennial borrowers, while FHA loans held steady at 29 percent from the previous month. VA purchase loans for Millennial borrowers represented 79 percent of all VA closed loans in April, steady from the month prior, and up from 66 percent in February.
The time it took for Millennial homebuyers to close a loan remained flat month-over-month. Purchase loans took an average of 39 days to close and refinance loans took an average of 44 days. FHA purchase loans took an average of 40 days to close, compared to 41 days in March. VA purchase loans averaged 49 days-to-close, compared to 45 days the month prior.
Additional key findings from the April 2018 Ellie Mae Millennial Tracker include:
- Millennial males were listed as the primary borrower on 62 percent of closed loans, while females were listed on 32 percent and six percent that were unspecified; this compared to April 2017, where males were listed as the primary borrower on 65 percent of loans, females at 32 percent and three percent were unspecified.
- The average age of Millennial borrowers was 29.9, slightly down from 30.1 the month prior.
- At 721, the average FICO score for all Millennial borrowers held steady from the month prior and was down from 724 in February. The average FICO score for female borrowers in April was 723. It was 722 for male borrowers.
- The hottest housing markets for Millennials continued to be in the Midwest. The top markets by percentage of Millennial loans closed included Clarksburg. W.Va. (84 percent), Effingham, Ill. (82 percent), and Boone, Iowa (79 percent).
Ellie Mae® (NYSE: ELLI) is the leading cloud-based platform provider for the mortgage finance industry.
The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80 percent of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass® all-in-one mortgage management solution. Given the size of this sample and Ellie Mae’s market share, it is a strong proxy of Millennial mortgage indicators across the country. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type.
For more information, visit http://elliemae.com/millennial-tracker.
ABOUT THE ELLIE MAE MILLENNIAL TRACKER
The Ellie Mae Millennial Tracker focuses on Millennial mortgage applications during specific time periods. Ellie Mae defines Millennials as applicants born between the years 1980 and 1999. New data is updated on the first Monday of every month for two months prior.
The Millennial Tracker is a subset of our Origination Insight Report, which details aggregated, anonymized data pulled from Ellie Mae’s Encompass origination platform. Additional information regarding the Origination Insight Report can be found at http://elliemae.com/resources/origination-insight-reports. News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.
About Ellie Mae
Ellie Mae (NYSE:ELLI) is the leading cloud-based platform provider for the mortgage finance industry. Ellie Mae’s technology solutions enable lenders to originate more loans, reduce origination costs, and shorten the time to close, all while ensuring the highest levels of compliance, quality and efficiency. Visit EllieMae.com or call 877.355.4362 to learn more.
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