As average interest rates on all 30-year notes declined in April, the percentage of millennials refinancing loans increased, according to the latest Ellie Mae Millennial Tracker.
In April, the average 30-year note rate declined to 4.61 percent, down from 4.75 percent in March 2019, the tracker found. Simultaneously, the percentage of refinance loans among millennials increased 4 percent month-over-month, from 11 percent in March to 15 percent in April, the highest share since February 2018.
“Interest rates continued to drop in April and millennials jumped on the opportunity to refinance,” Ellie Mae Executive Vice President of Strategy and Technology Joe Tyrrell said in a release. “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 mortgage process,” Tyrrell said.
According to the tracker, time to close for all loans dropped to 39 days in April, the lowest figure since February 2015. Refinances closed in 36 days compared with 38 days for purchases.
Sixty-nine percent of loans to millennials in April were conventional, 26 percent were FHA.
“Millennial homebuyers continue to show a strong preference for conventional loans,” Tyrrell said. “There’s an opportunity to educate millennials on alternate loan types, including FHA loans, which allow for smaller downpayments, 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.”
Ellie Mae said the average FICO score for millennial borrowers in April was 721, up from 720 the previous month, and average age of borrowers dropped to 30.2, down slightly from 30.3 in March.