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Millennials jumped to take advantage of low mortgage rates by refinancing at an increased share of 6 percentage points in June, according to Ellie Mae.
The average 30-year note rate continued tumbling to 4.39% in June, marking the lowest rate borrowers of this cohort have seen since January 2018. The rate is down from 4.86% during the same period last year and from 4.53% in May. The share of millennial refis elevated to 14% from 8% annually while holding steady month-over-month.
“Savvy millennials looking to lock in lower interest rates on their mortgages have helped drive a surge in refinance activity,” Joe Tyrrell, chief operating officer at Ellie Mae, said in a press release. “While the Federal Reserve’s rate cut doesn’t necessarily mean that rates on mortgages will continue to drop, we’ll be keeping a close eye on its impact on both the refinance and overall mortgage market as we do anticipate that it will effect consumer behavior, including millennials who look to lower their payments.”
The time to close a loan fell to 40 days from 42 days a year prior, but bumped up a day from May. About 72% of mortgages completed in June were conventional and 24% were Federal Housing Administration loans. U.S. Department of Veterans Affairs accounted for 2%, while other unspecified loans occupied the remaining 3% of closed mortgages.
“There is and has been a massive opportunity for lenders to educate potential homeowners on the loan options available to them,” Tyrrell said. “For example, borrowers with lower FICO scores can take advantage of FHA loans to make homeownership a reality, but the overall awareness that this loan type exists needs to increase.”
The average millennial FICO score rose to 725, up from 723 a year ago and 721 in May. The average millennial borrower age also rose, inching up to 30.4 from 29.9 in June 2018 and May’s 30.3. Married individuals represented 54% of loans closed, while 46% of primary borrowers were single. About 59% were male, 31% female and 10% unspecified.