More millennial homebuyers refinanced mortgage loans in August as average interest rates dropped to its lowest level since December 2016.
Refinances for millennials grew 2% month-over-month to 25% of all closed loans, the highest share since December 2015, according to the Ellie Mae Millennial Tracker.
Average interest rates for 30-year notes fell to 4.059%, spurring the increase. Meanwhile, shortage in affordable housing in growing markets led to purchases dipping for the second consecutive month, accounting for 74% of all closed loans.
Conventional refinance loans climbed to 29% from 27%, while conventional purchase loans dropped to 69% from 72%. VA refinances also posted a monthly increase to 38% as purchases declined to 62%. FHA purchases were down to 91% and refinances inched up one point to 9% in August.
“We are seeing millennial homeowners who may have purchased homes only a few years ago quickly taking advantage of the industry’s extremely low interest rates,” said Ellie Mae Chief Operating Officer Joe Tyrrell. “We will also be watching to see if the increased purchase power from a lower rate environment enables some Millennials to make the leap into homeownership as we enter the fall home-buying season.”
With the increase of refinances, time to close for all loans to millennials and refinance loans was 42 days in August. Purchase loans remained unchanged for the third month in a row at 40 days.