Millennial Loans To Buy New Homes Increase Steadily

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Millennial Loans To Buy New Homes Increase Steadily

Millennial homebuyers across the country continued to pursue the limited housing inventory available despite rising interest rates in April, as millennial loans rose to highest level since May 2017, according to a release from Ellie Mae.

Eighty-nine percent (89 percent) of mortgage loans made to Millennial borrowers during the month were for new home purchases, up one percentage point from the month prior, and the highest percentage since May 2017.

Key findings from the April 2018 Ellie Mae Millennial Tracker include:

  • Millennial males were listed as the primary borrower on 62 percent of closed loans, while females were listed on 32 percent and six percent that were unspecified; this compared to April 2017, where males were listed as the primary borrower on 65 percent of loans, females at 32 percent and three percent were unspecified.
  • The average age of millennial borrowers was 29.9, slightly down from 30.1 the month prior.
  • At 721, the average FICO score for all millennial borrowers held steady from the month prior and was down from 724 in February. The average FICO score for female borrowers in April was 723. It was 722 for male borrowers.
  • The hottest housing markets for Millennials continued to be in the Midwest. The top markets by percentage of millennial loans closed included Clarksburg. W.Va. (84 percent), Effingham, Ill. (82 percent), and Boone, Iowa (79 percent).

As interest rates crept up, average loan amounts to millennials fell. The average amount was $194,300 in February, $192,055 in March and $188,171 in April.

Millennial Loans To Buy New Homes Increase Steadily

Millennial loans increase because of life changes

“Most millennials are buying a house because there are major changes happening in their lives such as starting a family, getting a new job, or because they’ve decided that they want to build equity and stop renting,” Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae, said in the release.

 “We believe Millennial home purchases will continue to climb this summer and while interest rates may slightly impact the size of homes borrowers can get for their money, we don’t foresee it impacting their desire to buy.”

Overall, conventional loans represented 67 percent of all closed loans to Millennial borrowers, while FHA loans held steady at 29 percent from the previous month. VA purchase loans for Millennial borrowers represented 79 percent of all VA closed loans in April, steady from the month prior, and up from 66 percent in February.

The time it took for Millennial homebuyers to close a loan remained flat month-over-month. Purchase loans took an average of 39 days to close and refinance loans took an average of 44 days. FHA purchase loans took an average of 40 days to close, compared to 41 days in March. VA purchase loans averaged 49 days-to-close, compared to 45 days the month prior.

Resources:

Ellie Mae Millennial TrackerTM

Purchase Loans to Millennials Steadily Increased Even as Interest Rates rose According to Ellie Mae Millennial Tracker™

 

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