While mortgages for home purchases made up the bulk of loans taken out by millennials over the second half of 2016, they gradually declined as a percentage of all loans as the year went on, a new report found.
The Ellie Mae Millennial Tracker first started tracking in June 2016, when purchase loans accounted for 85 percent of the loans millennial borrowers applied for, while refinances accounted for 14 percent of loan activity. By November, purchase loans dropped to 77 percent and refinances increased to 22 percent of all loans.
More than half (57 percent) of millennial borrowers took out conventional loans during the latter part of 2016, followed by FHA loans (40 percent) and VA loans (1 percent). From September through November, average loan amounts for home purchases held steady at $182,383, while loans for refinances had a higher average of $223,979.
FICO scores on closed purchase loans by millennials hovered in the low 720s from June through November. The average FICO score on refinances started at 721 in June, rose to a peak of 750 in October, then tapered off to 747 in November.
“While we have seen a steady increase in refinances among millennials, the bulk of this generation is still entering the market as first-time homebuyers,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae, in a press release accompanying the report. “Across the board, we’re continuing to see strong interest in home ownership from this younger generation.”
Additional findings from the November Ellie Mae Millennial Tracker include:
- Men who were listed as the primary borrower for new-home purchases were 28.8 years old, on average, and 55 percent were married
- Women who were listed as the primary borrower for new-home purchases, were 28.6 years old, on average, and 36 percent were married
- Average days to close for all home loans remained flat at 47 days, compared with October
- Average time to close refinances increased to 51 days, up from 49 in October
- Average days to close purchases increased to 46 days, up from 45 the month prior
- Across all loans the share of conventional loans remained flat at 64 percent, with share of FHA loans decreasing to 32 percent of all closed loans, down from 33 percent in October
- Across all loans, both the average debt-to-income ratio (DTI) and loan-to-value (LTV) held steady at 23/36 and 87, respectively