Millennial Home Buyers Increase Purchase Loan Power

Ellie Mae, Pleasanton, Calif., said purchase loans to Millennial home buyers increased in April, even as interest rates rose, as competition for limited housing inventory persisted.

The company’s monthly Millennial Tracker reported 89 percent of mortgage loans made to Millennial borrowers during April were for new home purchases, up 1 percentage point from March, to the highest percentage since May 2017. This, said MBA Executive Vice President of Corporate Strategy Joe Tyrrell, despite 30-year fixed interest rates rising to 4.73 percent in April, the highest rate recorded since Ellie Mae began tracking Millennial loan data in 2014.

Average loan amounts to Millennials fell, the report said, from $194,300 in February, $192,055 in March to $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,” Tyrrell said. “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.”

The report said 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.

Other report findings:

–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 3 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.

–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).