Despite tight housing inventory across the country, millennial purchase activity continued to rise in July, according to the latest Ellie Mae Millennial Tracker.
Share of all purchase loans closed to millennials reached 61 percent for the month, up 5 percentage points from June. This increase marks the highest purchase share for the generation since March 2020.
During July, millennial purchasing power grew as the average interest rate for all loans closed by this group fell to 3.25 percent, the lowest it’s been since Ellie Mae began tracking this data. The previous low occurred just one month prior, when the average rate dropped to 3.36 percent.
“Younger millennials, those born from 1991-1999, were the sub-group responsible for the most closed purchase home loans for the month,” according to Ellie Mae, “with 81 percent of loans closed by younger millennials were for purchases. This was a stark contrast compared to loans closed by older millennials (30-40 years-old), many of whom already own homes. Fifty-three percent of their loans were for purchases.”
Younger millennials also took advantage of Federal Housing Administration (FHA) loans in July. Ninety-seven percent of closed FHA loans for purchases were for younger millennials, the highest percentage since Ellie Mae started tracking this data in 2016. In comparison, 92 percent of closed FHA loans by older millennials were for purchases.
The report also showed that younger millennials closed loans with a slightly lower FICO score average of 728 in July, compared with older millennials with an average FICO score of 747. Average FICO score for all closed loans across the generation was 739.
“We’re seeing a new wave of younger millennial homebuyers flood the market as we enter peak homebuying season,” Ellie Mae Chief Operating Officer Joe Tyrrell said. “With interest rates at historic lows, now is the perfect time for younger millennials to purchase a home and start building equity. To encourage homeownership among the millennial generation, especially younger millennials, it is imperative lenders educate these borrowers on all loan types, including affordable options with less stringent credit requirements such as FHA loans.”