Spurred by the lowest average monthly rate since November 2017, the share of refinances among millennials jumped 9 percent month-over-month in July, reaching 23 percent after three consecutive months of minimal movement, according to the latest Ellie Mae Millennial Tracker.
Ellie Mae said average interest rates on all 30-year notes fell from 4.39 percent in June 2019 to 4.19 percent in July 2019. The average interest rate for millennials decreased for all three loan types, with rates for FHA loans dropping to 4.26 percent, rates for conventional loans falling to 4.15 percent and rates for VA loans declining to 3.73 percent.
“We’ve seen interest rates for millennials drop consistently throughout 2019, but from April through June, the refinance market was essentially flat,” Ellie Mae Chief Operating Officer Joe Tyrrell said in a release. “In the months leading up to July, consumers believed that rates would continue to decrease, and they were correct. Now, millennials are reaping the rewards and locking in historically low rates.
“Lenders need to do a better job of educating potential homebuyers on various loan types, especially with rates as low as they are,” Tyrrell added. “FHA loans, for example, have more flexible credit requirements and require smaller downpayments, which should be perfect for cash-strapped millennials. However, that demographic is not taking advantage of these types of loans.”
Ellie Mae said time to close for all loans was 41 days in July, compared with 40 in August. The average FICO score for millennial borrowers was 728 and the average age for a millennial closing a loan in July was 30.5 years old.