Ellie Mae: Millennial Refis in August Amid Rate Drops

Ellie Mae, Pleasanton, Calif., said interest rates hovering at or below 4 percent spurred a “surge” in millennial refinances in August.

The company’s monthly Millennial Tracker said refinances continued to climb to 25% of all closed loans for Millennials, up 2% from July and the highest percentage since December 2015. Ellie Mae said lack of affordable homes in growing markets also led to purchases dipping for the second month in a row, accounting for 74% of all closed loans.

The report said conventional refinance loans rose to 29% in August, up from 27% in July, while Conventional purchase loans shrunk to 69%, down from 72% in July and 82% in June. VA refinances rose to 38%, a steady month-over-month increase from 34%, as purchases fell from 66% to 62%, respectively. FHA percentages slightly varied from July, with purchases down from 92% to 91% in August, and refinances up one point from 8% to 9%, the highest percentage since February.

“We are seeing Millennial homeowners who may have purchased homes only a few years ago quickly taking advantage of the industry’s extremely low interest rates,” said Joe Tyrrell, chief operating officer with Ellie Mae. “We will also be watching to see if the increased purchase power from a lower rate environment enables some Millennials to make the leap into homeownership as we enter the fall home buying season.”

Other report findings:

–Time-to-close for all loans increased slightly to 42 days in August, compared to 41 in July. Time-to-close on refinance loans held at 42 days from July. Purchase loans also held steady for the third consecutive month at 40 days.

–Average age of Millennial home buyers remained at 30.5, the highest average since November 2015.

–Average FICO score for Millennial borrowers stayed steady at 728, the highest average since May 2015.