Interest rates may be higher but the desire of American millennials to buy their own home remains strong as they reach major life milestones.
Data from Ellie Mae shows that 89% of mortgage loans made to millennial borrowers in April were for the purchase of new homes, up 1 percentage point from March to its highest level since May 2017.
This was despite mortgage rates rising to their highest since Ellie Mae began tracking millennial loan data in 2014 with an average 4.73% compared to 4.63% a month earlier.
“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,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae.
Borrowers are getting younger
The average age of millennial borrowers in April was 29.9, slightly down from 30.1 in March. Their average FICO score held steady at 721.
Overall, conventional loans represented 67% of all closed loans to Millennial borrowers, while FHA loans held steady at 29% from the previous month. VA purchase loans for Millennial borrowers represented 79% of all VA closed loans in April, unchanged from March.
“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.”
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