Millennials Contributing to The Ongoing Refinance Boom

Rhea-AI Summary

In September 2020, millennial mortgage refinances surged to 43% of closed loans, a 3% increase from August, as interest rates neared 3%. Refinances comprised 51% of Conventional loans, the highest since June. Older millennials averaged a 3.00% interest rate, while younger millennials averaged 2.98%. Despite a slight decline in home purchases, millennials are still actively entering the market. The average time-to-close for all loans rose to 49 days, with refinance loans taking 55 days on average.

Positive

• Refinance share increased to 43% of all closed loans for millennials in September.
• 51% of Conventional loans were refinances, highest since June.
• Interest rates for both older (3.00%) and younger (2.98%) millennials remained low.
• The Ellie Mae Millennial Tracker provides valuable insights into millennial mortgage trends.

Negative

• Home purchases dipped to 56% of closed loans, down from 59% in August.
• Time-to-close for all loans rose to 49 days, indicating potential delays in processing.

PLEASANTON, Calif., Nov. 4, 2020 /PRNewswire/ -- With interest rates nearing 3% for all loans, many millennials took advantage of the opportunity to refinance their mortgages in September, according to the latest Ellie Mae Millennial Tracker. Refinances climbed to 43% of all closed loans for millennials in September, up 3% from the previous month.

Refinances accounted for 51% of Conventional loans in September, the highest percentage since June, and up from 48% just the month prior.

In September, older millennials locked in slightly higher interest rates of 3.00%, on average, compared to 2.98% for younger millennials. With interest rates historically low, the share of refinance loans increased for both sub-groups of millennials.

While millennials are buying homes, the end to summer homebuying seasonality meant purchases dipped for the second month in a row, accounting for 56% of all closed loans, down from 59% in August.

"We have seen a steady increase in refinances among millennials over the past month, as homeowners took advantage of historically low interest rates," said Joe Tyrrell, president, ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE). "However, the bulk of the millennial generation is still entering the market as first-time homebuyers and they're swooping up the limited inventory that is available in most markets."

Conventional purchase loans shrunk to 48% for the month, down from 52% in August. VA refinances stayed steady at 35% month-over-month, and VA purchase loans held at 65% month-over-month during this same time period. Meanwhile, FHA percentages have held steady for the past four months.

Time-to-close for all loans increased to 49 days in September, compared to 47 in August. Given the increase in refinances, the time-to-close on refinance loans also increased by two days, month-over-month, to 55 days in September.

The Ellie Mae Millennial Tracker offers insights into two groups of millennial homebuyers: older millennials between 30 and 40 years old, and younger millennials between 21 and 29 years old.

Ellie Mae Millennial Tracker – Older Millennials vs. Younger Millennials
	Older Millennials	Younger Millennials
Closed Loans (Share) — All
Refinance	51%	22%
Purchase	48%	77%
Loan Type - All
FHA	12%	24%
Conventional	85%	72%
VA	1%	1%
Other	1%	3%
Time To Close (Days) — All
All	50	45
Refinance	55	54
Purchase	44	43
Average Interest Rates
30 Year Note Rate — ALL	3.00%	2.98%
30 Year Note Rate — FHA	2.99%	2.98%
30 Year Note Rate — Conventional	2.99%	2.97%
30 Year Note Rate — VA	2.74%	2.74%
Average FICO	747	728

 

The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80% of all closed mortgages dating back to 2014 that were initiated on Ellie Mae's Encompass^® all-in-one mortgage management solution. Given the size of this sample and Ellie Mae's market share, it is a strong proxy of millennial mortgage indicators across the country. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type. For more information, visit http://elliemae.com/millennial-tracker.

About the Ellie Mae Millennial Tracker
The Ellie Mae Millennial Tracker focuses on millennial mortgage applications during specific time periods. Ellie Mae defines millennials as applicants born between the years 1980 and 1999. New data is updated on the first Monday of every month for two months prior. The Millennial Tracker is a subset of our Origination Insight Report, which details aggregated, anonymized data pulled from Ellie Mae's Encompass origination platform. Additional information regarding the Origination Insight Report can be found at http://elliemae.com/resources/origination-insight-reports. News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.

About Ellie Mae
Ellie Mae, now ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE), is the leading cloud-based loan origination platform provider for the mortgage industry. Ellie Mae's technology solutions enable lenders to originate more loans, lower origination costs, and reduce the time to close, all while ensuring the highest levels of compliance, quality, and efficiency. Visit ‪EllieMae.com or call ‪(877) 355-4362 to learn more.

© 2020 Ellie Mae, Inc. Ellie Mae^®, Encompass^®, AllRegs^®, Mavent^®, Velocify^®, Capsilon®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

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SOURCE Ellie Mae

FAQ

How much did millennial mortgage refinances increase in September 2020?

Millennial mortgage refinances increased to 43% of closed loans, up from 40% in August.

What percentage of Conventional loans were refinances in September 2020?

Refinances accounted for 51% of Conventional loans in September 2020.

What were the average interest rates for older and younger millennials in September 2020?

Older millennials had an average interest rate of 3.00%, while younger millennials had an average of 2.98%.

What was the impact on home purchases by millennials in September 2020?

Home purchases dipped to 56% of all closed loans, a decrease from 59% in August 2020.

What was the average time-to-close for loans in September 2020?

The average time-to-close for all loans increased to 49 days in September 2020.