Refinance activity for millennials reached an all-time high in March as interest rates plummeted, according to the latest Ellie Mae Millennial Tracker.
During March, the share of refinances among millennial borrowers increased for the third consecutive month, the tracker found. The refinance share for all millennials in March was 38 percent, up 4 percent from February
Ellie Mae said the average interest rate for all 30-year loans closed by millennials in March was 3.66 percent, the lowest average rate since May 2016 and down from 3.86 percent in February.
“The Federal Reserve cut its target interest rate to near-zero in March, causing interest rates to drop and giving savvy millennial homeowners the opportunity to refinance to more favorable rates,” Ellie Mae Chief Operating Officer Joe Tyrrell said in a release.
“That pattern follows a trend we’ve seen in our data over the last 12 months, but what’s more surprising is time to close numbers decreasing despite the surge in refinance activity and the limitations lenders are facing as a result of COVID-19,” Tyrrell said. “Technology is now more important than ever and lenders investing in the solutions necessary to manage their pipelines virtually are seeing success.”
Ellie Mae said average time to close for refinance loans in March fell two days month-over-month, from 38 to 36. Average time to close for all loans in March dropped from 41 to 39 days during the same time period.
“Educating millennials on the various loan types available is a priority for lenders, and seeing younger millennials securing FHA loans is a sign that lenders are making progress on this front,” Tyrrell said. “FHA loans tend to be a great option for younger borrowers as they require a smaller downpayment and have more flexible credit requirements than conventional loans.”