According to the latest Ellie Mae Millennial Tracker, the average interest rates on all 30-year notes dipped to 4.059 percent in August, the lowest since December 2016, spurring a surge in refinances for millennial homebuyers. Refinances continued to climb to 25 percent of all closed loans for millennials, up 2 percent from the previous month and the highest percentage since December 2015.
Lack of affordable homes in growing markets also led to purchases dipping for the second month in a row, accounting for 74 percent of all closed loans, Ellie Mae said.
Conventional refinance loans rose to 29 percent in August, up from 27 percent the month prior, while Conventional purchase loans shrunk to 69 percent, down from 72 percent in July and 82 percent in June.
Likewise, Veteran Affairs refinances rose to 38 percent, a steady month-over-month increase from 34 percent, as purchases fell from 66 percent to 62 percent, respectively. Federal Housing Administration percentages slightly varied from the previous month, with purchases down from 92 percent to 91 percent in August, and refinances up one point from 8 percent to 9 percent, the highest percentage since February 2019, according to the Ellie Mae Tracker.
“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,” Ellie Mae Chief Operating Officer Joe Tyrrell said in the report. “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 homebuying season.”
Additional insights from the August Millennial Tracker include:
- Time-to-close for all loans increased slightly to 42 days in August, compared with 41 in July. Given the increase of refinances, the time-to-close on refinance loans held at 42 days from the previous month. Purchase loans also held steady for the third consecutive month at 40 days.
- The average age of millennial homebuyers remained at 30.5, the highest average since November 2015.
- The average FICO score for millennial borrowers stayed steady at 728, the highest average since May 2015.