December figures show buyers brushed off higher rates, low inventory
Millennial homebuyers closed a higher share of purchase loans in December than a year earlier.
Despite the challenges of tight inventory and rising mortgage rates, 88% of all loans closed by this generation was for home purchase, a rise of 4 percentage points from December 2017.
Meanwhile, figures from the Ellie Mae Millennial Tracker show that higher rates for 30 year FRMs (average 5.12%) coincided with a decline in the share of refinance loans closed by millennials (10%, down 5% from a year earlier).
“Many Millennials are prioritizing homeownership and rather than being deterred by a tight market, they’re increasingly competing for available homes or moving to areas where inventory is more robust,” said Joe Tyrell, executive vice president of corporate strategy for Ellie Mae.
Conventional loans took the largest share of loans closed by millennials (68%). FHA accounted for 27%, VA share was 2%, and other loans accounted for 3%.
The share of Conventional purchase loans increased from 80% to 87% from December 2017 to December 2018.
30-year rates on both Conventional (5.09%) and VA (4.86%) loans reached their highest mark since Ellie Mae began tracking the data in 2016.
Average FICO score for millennials closing loans in December was 721, down from 722 a year earlier, while their average age ticked lower.
“The average age for a Millennial homebuyer in December was 29.5 years old, the lowest for any month in 2018,” added Tyrell. “This may be driven in part by younger borrowers who no longer feel the need to wait for a typical life event like marriage before buying a home. In fact, from 2016 to 2018, 63 percent of borrowers between the age of 20 and 29 were single when they closed their loans.”