According to the latest Ellie Mae Millennial Tracker, the average interest rate on all 30-year loans closed by millennials in January dropped to 3.94 percent, down slightly from 3.95 percent in December. This decline marks a deviation from the months prior, as average rates rose month-over-month in both November and December, Ellie Mae said.

January also saw refinance share – the percent of all loans closed during the month that were refinances – among millennials jump up after consecutive months of decline. During the month, 31 percent of loans closed by millennials were refinances, up from 27 percent in December.

For conventional loans, which represented 71 percent of total loans closed in January by this demographic there was a refinance share increase from 33 percent to 38 percent month-over-month as average rates for this loan type dipped slightly.

“January was a favorable market for both millennial homebuyers and homeowners looking to capitalize on lower interest rates by refinancing their mortgages,” Ellie Mae Chief Operating Officer Joe Tyrrell said in the report. “With the purchase power of millennials increasing and inventory still tight across the country, we expect millennials to continue to search outside of major metropolitan areas, where there is more inventory, when making their homebuying decisions.”

The January data, according to Ellie, shows that refinance share among older millennials was 38 percent compared with 17 percent for younger millennials. Younger millennials received an average interest rate of 3.9 percent, lower than older millennials at 3.95 percent as millennials between 21 and 29 were more likely to take advantage of FHA loans.

According to the January data, 31 percent of all loans closed by this group were FHA loans, 11 percentage points higher than older millennials.

“Millennials are expected to fuel the housing market in 2020 and it’s vital that lenders understand how to market to and work with this demographic,” Tyrrell said. “We know that millennials prefer working with lenders who provide a blend of high-touch human interaction and automated processes, but as this demographic grows and ages up, the most successful lenders will be those that understand the nuances between older and younger millennials and adjust their strategies based on this insight.”