Millennials Take Advantage of Lower Rates to Refinance
MBA NewsLink Staff
Ellie Mae, Pleasanton, Calif., said Millennial homebuyers took advantage of slightly lower interest rates in January to refinance their mortgages.
The company's monthly Millennial Tracker reported refinances by Millennial borrowers accounted for 13 percent of all closed loans in January, the highest percentage since February 2018. Similarly, the January Ellie Mae Origination Insight Report, which explores trends among borrowers of all ages, showed refinances climbed to 35 percent of closed loans in January, up from 29 percent in December.
The report said refinances also made up a larger share of each type of loan in January. Refinances for conventional loans for Millennial borrowers rose to 14 percent, up from 11 percent in December, while FHA refinances rose from 6 to 7 percent in January. During that same period, VA refinances rose to 35 percent, up from 27 percent the month prior.
"With average interest rates slightly falling in January, Millennials took advantage of refinance opportunities," said Joe Tyrrell, executive vice president of strategy and technology with Ellie Mae. "While we continue to see Millennials enter the housing market and exercise their purchase power, the uptick in refinances may indicate maturity among this generation who previously purchased a home and are looking for an opportunity to take advantage of lower monthly interest payments."
Ellie Mae reported the average Millennial primary borrower refinancing their home in January was 33 years old, with a FICO score of 728. Two-thirds of those who refinanced were married (66 percent) while one-third were single (33 percent) and 1 percent was unspecified. Additionally, the majority of primary borrowers who refinanced were male (63 percent).
Other key findings:
--The share of conventional loans increased to 69 percent of all closed loans, slightly up from 68 percent the month prior, while FHA loans held steady at 27 percent from December.
--The average FICO score of Millennial borrowers who closed on loans in January increased slightly to 722, up from 721 in December.
--Top five markets for Millennial borrowers in January were Warrensburg, Mo., Somerset, Pa., Ottumwa, Iowa, Minot, N.D., and Williston, N.D.