The percentage of residential mortgages tabbed for home purchases hit 47% in May, the highest purchase share in 15 months.
That’s according to ICE Mortgage Technology’s latest Origination Insight Report, which revealed that purchase mortgage share rose four percentage points from 43% in April. May’s share is the highest since February 2020, when 49% of the residential mortgage market was made up of purchase loans.
ICE’s figures show that millennials continue to drive purchase borrowing, with 67% of May loans closed by millennials marked for purchasing a home. May was the third straight month of steadily rising purchase share for millennials; purchase percentage for the demographic rose from 61% in April and 51% in March.
Younger millennial borrowers, especially, have been active in buying homes. Purchases accounted for 82% of loans closed by younger millennials — born between 1991 and 1999 — up from 78% in April. For older millennials, purchases comprised 60% of closed mortgages, up from 53% the month prior.
“Across the country, we’re seeing a strong and competitive purchase market, particularly among millennials,” said Joe Tyrrell, President of ICE Mortgage Technology. “With FICO score requirements loosening, millennials are taking advantage of the current environment to continue to jump into homeownership.”
Average FICO scores for millennial borrowers dipped for the fourth straight month. Millennial borrowers during May had an average FICO of 732, down from 734 in April and 739 in May. Across all generations, average FICO score rises to 744 in May, down from 747 in April and 751 in March. The Mortgage Bankers Association reported last month that mortgage credit availability increased in May, with the organization’s Mortgage Credit Availability Index rising to a reading of 129.9, its highest level since close to the start of the pandemic.
Activity among young and first-time buyers may account for the slight backtrack in the conventional share of originations in May. The conventional share of all closed mortgages fell to 79%, the first time since August 2020 that conventional loans made up less than 80% of all loans closed for the month. The share of FHA loans, which allow lower credit scores and are easier to qualify for, inched upward to 11%, up from 10% in April. Conventional share has now receded for four straight months, while FHA share has grown every month in that same timeframe.