Millennials Contribute to Ongoing Refinance Boom

PLEASANTON, CA—With interest rates nearing 3% for all loans, many millennials took advantage of the opportunity to refinance their mortgages in September. That is according to the latest Ellie Mae Millennial Tracker report.

According to the report, refinances climbed to 43% of all closed loans for millennials in September, up 3% from the previous month. Refinances accounted for 51% of Conventional loans in September, the highest percentage since June, and up from 48% just the month prior.

In September, older millennials locked in slightly higher interest rates of 3%, on average, compared to 2.98% for younger millennials. With interest rates historically low, the share of refinance loans increased for both sub-groups of millennials.

While millennials are buying homes, the end to summer homebuying seasonality meant purchases dipped for the second month in a row, accounting for 56% of all closed loans, down from 59% in August, the report says.

“We have seen a steady increase in refinances among millennials over the past month, as homeowners took advantage of historically low interest rates,” says Joe Tyrrell, president, ICE Mortgage Technology, a division of Intercontinental Exchange Inc. “However, the bulk of the millennial generation is still entering the market as first-time homebuyers and they’re swooping up the limited inventory that is available in most markets.”

Conventional purchase loans shrunk to 48% for the month, down from 52% in August. VA refinances stayed steady at 35% month-over-month, and VA purchase loans held at 65% month-over-month during this same time period. Meanwhile, FHA percentages have held steady for the past four months, the report says.

Time-to-close for all loans increased to 49 days in September, compared to 47 in August. Given the increase in refinances, the time-to-close on refinance loans also increased by two days, month-over-month, to 55 days in September.