Low mortgage rates have continued to fuel a refinance surge nationwide, and millennial borrowers are no exception.
This past August, refinances climbed to a 25% share of all closed home loans among millennial borrowers, growing 2 percentage points from the previous month and reaching their highest percentage since December 2015.
The millennial refinance share among various subsets of mortgage loans grew across the board. Their share of conventional loan refinances grew 2 percentage points to 29% in August, while refinances backed by the Federal Housing Administration ticked up from 8% to 9%, their highest share since February of this year. Millennial refinances guaranteed by the U.S. Department of Veterans Affairs jumped 4 percentage points, from 34% to 38%.
“We are seeing millennial homeowners who may have purchased homes only a few years ago quickly taking advantage of the industry’s extremely low interest rates,” said Joe Tyrrell, chief operating officer at Ellie Mae. “We will also be watching to see if the increased purchase power from a lower rate environment enables some millennials to make the leap into homeownership as we enter the fall homebuying season.”
Thus far, however, the lack of affordable homes in growing markets has counteracted the lure of low rates. The purchase share of mortgages taken out by millennials dipped in August for the second month in a row, accounting for 74% of closed loans.
According to Ellie Mae data, the average age of millennial homebuyers in August stayed unchanged at 30.5, the highest figure since November 2015. The average FICO score for millennial borrowers was flat at 728, matching the highest figure since May 2015.