Savvy Millennials Take Advantage of Interest Rates Below 3%, ICE Mortgage Technology Millennial Tracker Finds

Rhea-AI Summary

In December 2020, average interest rates on 30-year loans dropped to 2.93%, encouraging refinancing among millennials, which rose to 46% of all loans. While the time to close a loan increased to an average of 52 days, older millennials (30-40 years) accounted for 53% of refinancing, compared to 26% for younger millennials (21-29 years). The average interest rate for younger millennials was 2.90%, slightly lower than that of older millennials. The ICE Mortgage Technology Millennial Tracker provides ongoing insights into millennial mortgage trends.

Positive

• Decrease in average interest rates to 2.93% benefits refinancing activities.
• Refinance share increased to 46%, indicating strong market demand.
• Older millennials led the refinancing trend with 53% share.
• Younger millennials secured lower average rates at 2.90%, enhancing affordability.

Negative

• Time to close loans increased to 52 days, up from 43 days a year earlier.
• Overall loan closing times are lengthening, potentially deterring some buyers.

Average interest rates on all 30-year loans continued to decline to historic lows in December 2020, prompting an increase in refinance share from millennial homeowners. According to the latest ICE Mortgage Technology™ Millennial Tracker, average interest rates decreased for the ninth consecutive month to 2.93%, down from 2.97% in November 2020.

In tandem, refinance activity increased slightly to represent 46% of all loans, up from 45% the month prior. While share of refinances remained high so did average time to close a loan. Average time to close for all loan types held steady at 52 days-to-close – a stark difference to the same month the year prior, December 2019, when it took 43 days to close a loan. Among purchase loans, average time to close also increased by two days from 45 in November 2020 to 47 in December 2020.

“Millennials, even those that had just purchased a home in the past few years, found themselves in a great position to take advantage of the historically low rates and contributed to the ongoing high refinance volume,” said Joe Tyrrell, president, ICE Mortgage Technology. “At the same time, lenders that have already adopted virtual solutions, like eClose, are seeing their early investments really pay off as they are better positioned to efficiently manage this long-term refinance boom.”

The ICE Mortgage Technology Millennial Tracker divides millennials into two groups: older millennials – borrowers between 30 and 40 years old, and younger millennials between 21 and 29 years old. Older millennials were responsible for the majority of refinance activity: refinance share for older millennials increased to 53% in December, up one percentage point from the month prior and more than double the refinance share of younger millennials at 26%. However younger millennials who did refinance were able to secure lower average interest rates (2.90%) compared with their older counterparts (2.93%).

ICE Mortgage Technology Millennial Tracker – Older Millennials vs. Younger Millennials

	Older Millennials	Younger Millennials
Closed Loans (Share) — All
Refinance	53%	26%
Purchase	46%	74%
Loan Type - All
FHA	12%	23%
Conventional	85%	73%
VA	2%	1%
Other	1%	2%
Time To Close (Days) — All
All	53	49
Refinance	58	58
Purchase	47	46
Average Interest Rates
30 Year Note Rate — ALL	2.93%	2.90%
30 Year Note Rate — FHA	2.91%	2.89%
30 Year Note Rate — Conventional	2.94%	2.90%
30 Year Note Rate — VA	2.52%	2.51%
Average FICO	747	728

The ICE Mortgage Technology 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 ICE Mortgage Technology’s Encompass^® all-in-one mortgage management solution. Given the size of this sample, 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://icemortgagetechnology.com/millennial-tracker.

About the ICE Mortgage Technology Millennial Tracker

The ICE Mortgage Technology Millennial Tracker focuses on millennial mortgage applications during specific time periods. ICE Mortgage Technology 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 the Origination Insight Report, which details aggregated, anonymized data pulled from Encompass by ICE Mortgage Technology origination platform. Additional information regarding the Origination Insight Report can be found at http://icemortgagetechnology.com/resources/origination-insight-reports. News organizations have the right to reuse this data, provided that ICE Mortgage Technology, Inc. is credited as the source.

About ICE Mortgage Technology

ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE), is the leading cloud-based loan origination platform provider for the mortgage industry. Our 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 http://icemortgagetechnology.com/ or call (877) 355-4362 to learn more.

© 2021 Ellie Mae, Inc., doing business as ICE Mortgage Technology. All rights reserved. Encompass®, Millennial Tracker™, and the ICE Mortgage Technology logo are trademarks of the entities of ICE Mortgage Technology.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210204005349/en/

FAQ

What was the average interest rate for 30-year loans in December 2020?

The average interest rate for 30-year loans in December 2020 was 2.93%.

What percentage of loans were refinanced by millennials in December 2020?

In December 2020, refinancing accounted for 46% of all loans.

How long did it take to close loans in December 2020?

The average time to close loans in December 2020 was 52 days.

What was the refinance share among older millennials in December 2020?

The refinance share among older millennials in December 2020 was 53%.

Did younger millennials secure lower interest rates than older millennials?

Yes, younger millennials secured an average interest rate of 2.90%, lower than the 2.93% for older millennials.