Savvy Millennials Jump on Low Interest Rates

Average interest rates on 30-year loans fell to historic lows in December, prompting an increase in refinance share from millennial homeowners, according to the latest ICE Mortgage Technology Millennial Tracker.

ICE Mortgage Technology, Pleasanton, Calif., reported average interest rates decreased for the ninth consecutive month to 2.93%, down from 2.97% in November. In tandem, refinance activity increased to represent 46% of all loans, up from 45% the month prior.

The report said while share of refinances remained high, so did average time to close a loan. Average time to close for all loan types held steady at 52, a stark difference to the same month the year prior, December 2019, when it took 43 days. Among purchase loans, average time to close also increased by two days from 45 in November to 47 in December.

“Millennials, even those that had just purchased a home in the past few years, found themselves in a great position to take advantage of the historically low rates and contributed to the ongoing high refinance volume,” said Joe Tyrrell, president, ICE Mortgage Technology. “At the same time, lenders that have already adopted virtual solutions, like eClose, are seeing their early investments really pay off as they are better positioned to efficiently manage this long-term refinance boom.”

The report said older millennials were responsible for the majority of refinance activity: refinance share for older millennials increased to 53% in December, up one percentage point from the month prior and more than double the refinance share of younger millennials at 26%. However younger millennials who did refinance were able to secure lower average interest rates (2.90%) compared to their older counterparts (2.93%).