Ellie Mae: Millennial Home Refinance Boom at 3-Year High
Ellie Mae, Pleasanton, Calif., said Millennials closed 33% of all mortgage refinances in September, the largest such share since it began tracking data in January 2016.
The company’s monthly Millennial Tracker said the share of refinances among Millennials jumped by 8% month-over-month as the average interest rate on all 30-year notes fell to 3.91%, the lowest average rate since December 2016. Share of purchase loans decreased from 74% to 66% in September.
The report said for conventional loans, the share of refinances jumped by 11 percentage points month-over-month to 40%; for VA loans, the refinance share increased by 10 percentage points to 48%. For FHA loans, the share of refinances rose by 1 percentage point to 10%.
Average interest rates for all loan types fell below 4% for the first time since November 2016. On average, millennials received interest rates of 3.90% for conventional loans, 3.52% for VA loans and 3.94% for FHA loans.
“Throughout 2019, we’ve seen millennials refinancing in order to take advantage of low interest rates and in September about one out of every three loans closed by this demographic was a home refinance, the highest share we’ve seen,” said MB COO Joe Tyrrell. “Lenders have done a great job educating millennials on recognizing refinance opportunities and as a result, this demographic has been able to lock in historically low rates. Going forward, we’ll be keeping a close eye on how these rates impact millennials looking to make a home purchase as well.”
Ellie Mae reported the average FICO score for millennial borrowers in September was 729, higher than at any other point this year. For conventional loans, average FICO scores by loan type held steady at 748 for purchase loans, and 759 for refinances, up three points from August.
Other September findings:
–Time to close for all loans remained flat at 42 days.
–Average age of millennial homebuyers in September rose to 30.6, the highest average age since January 2019.
–Conventional loans accounted for 75% of all loans closed in September, compared to 21% for FHA loans, 2% for VA loans and 2% for other loan types. –Share of refinances in key metro areas rose month-to-month in September including in Los Angeles (51% to 57%), Chicago (29% to 41%), Austin (19% to 29%), San Francisco (50% to 55%) and Dallas (19% to 26%).