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Millennial homebuyers are taking out larger FHA-backed mortgage, according to new data released by Ellie Mae.
During November, 26 percent of all closed mortgages to Millennials were FHA loans, with an average loan size of $186,454—a considerable increase from the $178,862 average in November 2017 and $170,167 in November 2016. In comparison, conventional loans accounted for 69 percent of closed loans made to Millennial borrowers in November with an average loan amount of $211,268.
Ellie Mae determined that 95 percent of Millennials taking out FHA loans were seeking home purchases, with only five percent of these loans going to refinancing. For conventional loans, 88 percent were for purchases and 11 percent were for refinances.
“November data from the Millennial Tracker shows that Millennial borrowers are taking out larger FHA mortgages and spending more on a home than in the past,” said Joe Tyrrell, Executive Vice President of Corporate Strategy for Ellie Mae. “For example, the average home appraisal value based on closed FHA loans for November 2018 in the San Francisco region was $562,479 compared to $523,192 a year ago at this same time, and up from $438,694 in 2016. We are seeing that as inventory remains relatively slim, borrowers are not waiting to buy an affordable home and are instead increasing their loan amount to purchase what is available on the market.”
