Ellie Mae Foresees Onslaught of Millennial Buyers
ORLANDO, Fla. – Millennial purchase activity is increasing, according to the latest Ellie Mae Millennial Tracker. Ellie Mae processes 35% of U.S. mortgage applications.
Millennials’ purchase share (percentage of all loans closed that went to homebuyers) grew for the second straight month in June, reaching 56% – up 9 percentage points compared to May and the highest purchase share since March 2020. They bought far more homes than any other generation.
“Millennials represent the single biggest opportunity in the housing market today,” says Ellie Mae Chief Operating Officer Joe Tyrrell. “Per U.S. Census data, there will be over 4 million millennials reaching the age of 29 to 30, each year for the next several years. That is important, because our data shows that is the average age when millennials enter the homebuying market.”
Tyrell says Ellie Mae’s data indicates “the true boom is just starting. We expect that their entry into the market, as they reach prime homebuying age, will fuel purchase transactions in 2021, 2022 and 2023.”
During June, millennial purchasing power grew as interest rates fell, though average time to close on all loans increased from 43 days in May to 45 days in June. Mortgage refis by current homeowners took longer – 49 days compared to 44 days the month before. Ginnie Mae says closing times have increased every month since March.
“With every passing day, it becomes more apparent just how critical digital mortgage technology is to lenders right now,” says Tyrrell. “Capabilities like online applications, automatic updates and eClosing offer millennial customers the seamless digital experiences they expect while freeing up time for the human interaction necessary to answer questions or concerns.”
The Ellie Mae Millennial Tracker divides millennials into two groups: older millennials (borrowers between 30 and 40 years old) and younger millennials (borrowers between 21 and 29 years old).
Average interest rates were nearly identical for the two groups. Younger millennials secured an interest rate of 3.35%, on average, compared to 3.34% for older millennials. Younger millennials also had a lower average FICO score, and this sub-group gravitated more toward FHA loans, which have less stringent credit requirements.
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