Millennial Reports: Refi Activity Slows; Homeownership Barriers Persist

Reports from Ellie Mae, Pleasanton, Calif., and Clever Real Estate show millennials continue to struggle in the housing market.

The monthly Ellie Mae Millennial Tracker reported the share of refinances closed by millennials decreased in November as interest rates on 30-year loans climbed. It said 31% of loans closed by millennials in November were refinances, down 3% from in October, marking the first month-over-month decrease for refinance share since last May.

The refinance market slowed as the average interest rate on all 30-year loans increased for the first time in 2019. For all loans closed by millennials in November, the average interest rate was 3.95%, up from 3.90% in October. Key markets across the United States saw the effects of surging interest rates as refinance share declined month-over-month in Los Angeles (56% to 50%), Chicago (43% to 38%), Austin (32% to 26%), Miami (28% to 22%), San Francisco (51% to 48%) and Dallas (30% to 26%).

 “Millennials are well-educated on their options as homeowners and have played a major role in driving the refinance market in 2019,” said Joe Tyrrell, chief operating officer with Ellie Mae. “Interest rates increasing in November for the first time this year may indicate that the refinance boom has passed its peak, however rates are still relatively low and refinance share is up 21 percentage points year-over-year.”

Ellie Mae said with the decline in share of refinances as a percentage of total closed loans, purchase activity was on a relative upswing. Time to close on all purchase loans increased from 41 days to 42 days month-over-month. Time to close on all refinance loans reached 45 days, up from 44 days in October.

The report said average FICO score for all loans closed in November remained relatively flat month-over-month, dropping one point to 729 while the average borrower age dipped slightly from 30.6 to 30.4. 

“For millennials, 29 and 30 are prime homebuying ages and millions of millennials will reach this marker next year,” Tyrrell said. “Millennials expect a balance of automation and human touch in the mortgage process and as their purchasing power continues to grow, it’s important that lenders invest in technology to meet this demographic’s expectations.”

Meanwhile Clever Real Estate released its 2020 Millennial Home Buyer Report, showing while the majority of millennials not only want to own a home, but 84% of millennials in 2019 considered it a major part of the American Dream. However, millennials are struggling to reach that financial milestone.

The report noted while more millennials are becoming homeowners, making up 45% of homebuyers in 2018, they continue to face obstacles. For the generation who stepped into adulthood in the wake of the Great Recession, many financial goals are delayed because they spent more on their education, took longer to establish careers and families and trudged through stagnant wages, said Clever Real Estate Research Assistant Francesca Ortegren.

The survey of 1,000 Americans who planned to purchase a home in 2020 found the majority of millennial homebuyers consider homeownership to be part of the American Dream, but fewer millennials believe that in 2020 (70%) than they did in 2019 (84%).

“Millennials are eager to buy homes: they’re willing to put up with higher interest rates, lease rent-to-own properties, buy near highways and waste facilities and delay marriage and kids in order to afford homes,” Ortegren said.

Other survey findings:

–More than 25% of millennial homebuyers planning to buy this year have less than $1,000 in savings.

–Nearly one-quarter of millennial homebuyers have more than $10,000 in debt but are still planning to spend over $200,000 on a new home.

–70% of millennials plan to put down less than the recommended 20%.

–Millennials are 3 times more likely to get help from a family member for a down payment than older generations; and those who get help expect $10,000 from family.

–Saving for a down payment is the biggest barrier to buying a home for millennials for the second year in a row.

–Millennials said they need roughly 1,700 square feet in their new home.

–Millennials are 1.7 times more likely to feel stressed or anxious about home ownership than boomers, suggesting they might have reservations about their financial readiness.

–Millennials are 30% more likely to take on an extra source of income for a down payment.

–Millennials are looking to the future: nearly 35% are motivated to buy because they want a family.

–The majority of millennials prioritize safe neighborhoods with good school districts instead of walkability to bars and shopping.

–The biggest deal-breakers for millennials are mold, pest/insect infestation, foundation issues, a leaky roof and “odd smells.”

–Millennials are 20% less likely to use a real estate agent and twice as likely to use social media to find homes than boomers.

–Nearly 25% of millennials said they hope to spend less than $100,000 on their home.

–Half of boomers said they wouldn’t buy if interest rates rose to over 4% compared to only 30% of millennials.

–Nearly 20% of millennials take on an additional source of income to help pay for a down payment.

–Nearly 80% of the millennial homebuyers surveyed are first-time buyers, compared to 60% of Gen-Xers and 33% of boomers, similar to 2019, but more boomers had owned before in 2020.

The survey can be found at