An increasing number of younger adults are becoming homeowners.
Mortgages to millennial borrowers for new home purchases continued their ascent in June, accounting for 91 percent of closed loans, according to the latest Ellie Mae Millennial Tracker report. In May, 90 percent of closed mortgages to members of the generation were for new home purchases, up from April’s 89 percent, and January’s annual low of 81 percent.
The increasing loan numbers correlate with the Census Bureau’s latest quarterly homeownership and vacancy report that shows homeownership among millennials age 35 and younger increased slightly, representing 36.5 percent of all homeowners, compared to 35.3 percent in the first quarter of 2018.
Conventional loans remained attractive among millennials, representing 69 percent of all loans closed in June, a slight uptick from 68 percent in May.
FHA loans represented 27 percent of all closed loans to this generation in June, down one percentage point from the month prior – a significantly higher number than the Ellie Mae June Origination Insight Report data that found FHA loans represented 20 percent of closed loans for borrowers of all ages.
Average millennial borrower FICO scores across all loan types rose slightly in June to an average of 723 – up from 721 which held steady March through May. For purchases, the average FICO score was 746 for a conventional loan, 681 for an FHA loan and 744 for a VA loan.
“This new generation of homebuyers wants the capability of an on-demand mortgage, and we are working to provide borrowers a convenient and secure digital mortgage offering that makes the homebuying process a seamless experience,” says Joe Tyrrell, Ellie Mae’s executive vice president of corporate strategy.
Across all loan types, it took millennials an average of 42 days to close on their loans in June, a day longer than in March, April and May. Purchases took an average 41 days and refinances took an average 45 days.
In June, the hottest housing markets for millennials were primarily in the Midwest. The top markets by percentage of millennial loans closed included Clarksburg, W.Va. (65 percent); Watertown, S.D. (65 percent); Boone, Iowa (64 percent); and Dickinson, N.D. (61 percent).
© 2018 Florida Realtors®