According to the latest Ellie Mae Millennial Tracker, refinances represented 33 percent of all loans closed by millennials in September 2019 as interest rates continued to drop. This marks the highest share of refinance activity since Ellie Mae began tracking the data in January 2016. The share of refinances among this demographic jumped 8 percent month-over-month as the average interest rate on all 30-year notes fell to 3.91 percent, the lowest average rate since December 2016.
The share of purchase loans decreased from 74 percent to 66 percent in September, according to Ellie Mae.
For conventional loans, the share of refinances jumped 11 percentage points month-over-month to 40 percent, and for VA loans, the refinance share increased 10 percentage points to 48 percent. In parallel, for FHA loans, the share of refinances rose 1 percentage point to 10 percent of total closed FHA loans.
The report also showed that the average interest rates for all loan types fell below 4 percent for the first time since November 2016. On average, millennials received interest rates of 3.90 percent for conventional loans, 3.52 percent for VA loans and 3.94 percent 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 since we launched the Millennial Tracker in January 2016,” Ellie Mae Chief Operating Officer Joe Tyrrell said in the report. “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.”
Additional insights from the September Millennial Tracker include:
- Time to close for all loans remained flat at 42 days.
- The average age of millennial homebuyers in September was 30.6, the highest average age since January 2019.
- Conventional loans accounted for 75 percent of all loans closed during the month, compared to 21 percent for FHA loans, 2 percent for VA loans and 2 percent for other loan types.
- Share of refinances in key metro areas rose month-to-month in September including in Los Angeles (51 percent to 57 percent); Chicago (29 percent to 41 percent); Austin, Texas (19 percent to 29 percent); San Francisco (50 percent to 55 percent); and Dallas (19 percent to 26 percent).