Millennials want to buy homes and the data shows that rising interest rates and tighter market conditions are not going to stop them.
Ellie Mae’s Millennial Tracker reveals that the average loan amount to millennial borrowers for all closed loans was $189,686 in October, down from $192,005 in September, yet higher than last October’s average of $186,567.
However, the gender gap remains in the size of closed loans with an average closed loan of $198,864 when men were listed as the primary borrowers compared to $188,607 for women.
Purchase loans accounted for 88% of closed loans for millennials, up 4 percentage points from a year earlier. Refinances slowly began to rise in the fourth quarter, representing 11% of all home loans to millennial borrowers
Of all closed loans to millennials, 68% were conventional loans, 27% were FHA loans, 2% VA loans and 3% were undisclosed.
“Although housing prices and interest rates are still rising at a faster pace in 2018 than they have in previous years, those trends are not yet stopping Millennials from purchasing homes and putting down roots,” said Joe Tyrell, executive vice president of corporate strategy for Ellie Mae. “It is important for lenders to educate Millennials on the value of FHA loans that bring lower down payments and can allow these new homebuyers to stretch their dollar a little further even with rising interest rates.”
The average FICO score for millennial borrowers remained flat for the third consecutive month at 722, slightly down from 723 in July.
The average age of all Millennial borrowers remained flat at 29.7 from the previous month, and essentially flat from 29.3 in October 2017.
Across all home loans, it took an average of 42 days to close, down 1 day from a year earlier. Purchase loans took an average 41 days, also 1 day faster than a year ago while refinances took 3 days longer (45) than a year ago.