Millennial refinance runs out of steam– Ellie Mae

by Candyd Mendoza06 Feb 2020

Refinance activity continued to wane in December as the refinance share of millennials faltered for the second consecutive month.

The share of millennial refinances comprised 27% of all loans closed in December, down from 31% the month prior, according to the latest Ellie Mae Millennial Tracker. The 4% drop marked the largest month-over-month decline in refinance share in 2019.

The decrease in millennial refi share occurred simultaneously with a slight increase in the 30-year mortgage rates, which inched up to 3.95% month over month. Before November, interest rates were on a downturn for 10 months in a row.

"The refinance boom potentially ending is a major topic of discussion in the industry at the moment, but the reality is that if we take a step back and look at the last year, overall the market is still favorable for homeowners looking to refinance and millennials considering purchasing their first home," said Ellie Mae Chief Operating Officer Joe Tyrrell.

Refinance share for conventional loans dwindled five percentage points to 71% month over month. However, overall refinance share grew 17% year over year.

The average FICO score for all millennial borrowers rose from 721 to 728 year-over-year. The average time to close for all loans held steady at 43 days. Meanwhile, time-to-close for purchase loans remained at an average of 42 days.

"Whether millennials are refinancing more or increasing their purchase activity, the reality is that this demographic plays a central role in shaping the market,” Tyrrell said. “Lenders can best set themselves up for success by understanding that, throughout the mortgage process, millennials want automation and human touch working in concert to create the best customer experience possible."