Millennial home buyers continued to close purchase loans in September 2018, despite interest rates rising to the highest point in the year, according to the latest Ellie Mae Millennial Tracker™.
Interest rates on all loans rose to 4.87% in September, up from 4.86% the month prior, while conventional interest rates rose to 4.86%, up from 4.85% the month prior, and FHA interest rates rose to 4.94%, up from 4.93% in September.
Purchase loans continued to outpace refinance loans among Millennial borrowers. 89% of loan volume last month was for home purchases, three percentage points higher than a year ago. 88% of closed purchase loans were conventional mortgages, compared to 81% in September 2017.
Millennials still showed their preference for conventional loans with 68% of all loans falling into that category. 27% of closed loans were FHA and 2% were VA loans.
Across all home loans, it took an average of 42 days to close last month. A year ago, it took two days longer at 44 days to close. Purchase loans took an average of 41 days to close last month, compared to an average of 42 days to close a year ago. Refinance loans closed in 45 days last month, on average, compared to 46 days in 2017.
“Despite rising interest rates, Millennials are still looking to buy homes,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “We’re still seeing the majority of Millennial loans fall into the conventional loan category, and with interest rates increasing, there is an even greater opportunity for the industry to educate these buyers on all of the options that they have available to them, including some of the higher loan-to-value products and FHA loan programs.”
Additional findings from the September 2018 Ellie Mae Millennial Tracker include:
· Millennial males (both single and married) were listed as the primary borrower on 61% of closed loans in September. Women were listed on 32% and the remainder did not specify a gender.
· 10% of all home loans to Millennial borrowers were for refinances, while 11% of conventional loans were for refinances, both up one%age point month-over-month for the quarter.
· 28% of closed VA loans in September 2018 were for refinances, a noticeable jump from 21% the month before.
· The average age of all Millennial borrowers was 29.7, essentially flat from 29.8 in July and August, and 29.4 a year ago.