Average interest rates on all 30-year notes to Millennial borrowers
declined in April 2019, spurring an increase in refinance loans from
members of the generation looking to take advantage of lower rates.
According to the latest Ellie
Mae Millennial Tracker, the average 30-year note rate declined to
4.61% in April, down from 4.75% in March 2019. With this drop, the
percentage of refinance loans increased 4% month-over-month, from 11% in
March to 15% in April, the highest share since February 2018.
Interest rates on Conventional, FHA and VA loans all decreased
month-over-month for Millennials in April. Rates on Conventional loans
decreased from 4.7% to 4.55%, FHA loans fell from 4.84% to 4.71% and VA
loans dropped from 4.36% to 4.21%. Shares of refinances in the three
loan categories increased from March to April. Conventional loans saw
the biggest surge in share of refinances, jumping from 13% to 17%, while
FHA refinances rose from 5% to 6% and VA refinances increased from 27%
Time to close for all loans dropped to 39 days, the lowest figure since
February 2015. The decrease in time to close was driven in large part by
a six-day decrease in time to close for refinances, which, on average,
closed faster than purchase loans for the first time since March 2016.
Refinances closed in 36 days compared to 38 days for purchases.
“Interest rates continued to drop in April and Millennials jumped on the
opportunity to refinance,” said 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
homeowning demographic. On top of external factors, an increased
investment in technology by many lenders is creating a more efficient
For all loans closed in April, 69% were Conventional and 26% were FHA,
while VA and other loans accounted for 2% and 3% respectively.
Conventional loans closed in 39 days compared to 40 days for FHA and 46
days for VA.
“Millennial homebuyers continue to show a strong preference for
Conventional loans,” added Tyrrell. “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.”
The average FICO score for Millennial borrowers was 721 in April, up
from 720 the previous month and average age dropped to 30.2, down
slightly from 30.3 in March. For those refinancing a Conventional loan,
the average FICO score was 745, the highest mark since December 2016,
while the average scores for those refinancing FHA and VA loans were 670
and 718, respectively.
Mae® is the leading cloud-based platform
provider for the mortgage finance industry.
The Ellie Mae Millennial Tracker is an interactive online tool that
provides access to up-to-date demographic data about this new generation
of homebuyers. It mines data from a robust sampling of approximately 80
percent of all closed mortgages dating back to 2014 that were initiated
on Ellie Mae’s Encompass® all-in-one mortgage management solution. Given
the size of this sample and Ellie Mae’s market share, it is a strong
proxy of Millennial mortgage indicators across the country. Searches can
be tailored by borrower geography, age, gender, marital status, FICO
score and amortization type. For more information, visit http://elliemae.com/millennial-tracker.
About the Ellie Mae Millennial Tracker
The Ellie Mae Millennial Tracker focuses on Millennial mortgage
applications during specific time periods. Ellie Mae defines Millennials
as applicants born between the years 1980 and 1999. New data is updated
on the first Monday of every month for two months prior. The Millennial
Tracker is a subset of our Origination Insight Report, which details
aggregated, anonymized data pulled from Ellie Mae’s Encompass
origination platform. Additional information regarding the Origination
Insight Report can be found at http://elliemae.com/resources/origination-insight-reports.
News organizations have the right to reuse this data, provided that
Ellie Mae, Inc. is credited as the source.
About Ellie Mae
Ellie Mae is the leading cloud-based platform provider for the mortgage
finance industry. Ellie Mae’s technology solutions enable lenders to
originate more loans, reduce origination costs, and shorten the time to
close, all while ensuring the highest levels of compliance, quality and
efficiency. Visit EllieMae.com or
call 877.355.4362 to learn more.
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