Millennial Mortgages: With Lower Rates, Refinances Rise
With average interest rates shrinking, millennials are moving to refinance, according to the Ellie Mae Millennial Tracker, recently released.
From March to April 2019, the average 30-year interest rate slid from 4.75 percent to 4.61 percent, Ellie Mae's report shows. Concurrently, conventional refinances rose 4 percent—to their highest in more than a year—and closings on refis shortened to 36 days, a three-year low.
"Interest rates continued to drop in April and millennials jumped on the opportunity to refinance," says Joe Tyrrell, executive vice president of Strategy and Technology at Ellie Mae. "The significant drop in time to close shows homebuyers were motivated to close refinances while rates were low, and that millennials are showing increased maturity as a home-owning demographic."
According to Ellie Mae, both FHA and VA refinances rose 1 percent. For a conventional refinance, the average FICO score was 745; for an FHA refinance, the average FICO was 670; and for VA, 718.
Of all millennial mortgages, 69 percent were conventional, 26 percent were FHA and 2 percent were VA. The average closing on conventional loans was 39 days, compared to 40 days for FHA loans and 46 days for VA loans.
"Millennial homebuyers continue to show a strong preference for conventional loans," Tyrrell says. "There's an opportunity to educate millennials on alternate loan types, including FHA loans, which allow for smaller down payments, making homeownership more accessible. There is no one-type-fits-all loan, so it's vital that all borrowers have a firm understanding of the various loan options available and communicate with their lender to make the decision that is right for them."
Source: Ellie Mae