Millennial Refinancing Hits New Peak
December 5, 2019
The share of refinances closed by Millennials totaled 34 percent of all loans in October, according to new data from Ellie Mae. This represented a one percent increase from September and the highest refinance share since Ellie Mae began tracking the data in January 2016.
During October, refinances made up 41 percent of conventional loans closed by Millennials, up from 40 percent in September. However, the refinance share for FHA loans was unchanged on a month-over-month measurement at 10 percent and the VA refinance share decreased to six percentage points to 42 percent.
“Declining interest rates have significantly increased millennials’ awareness of refinancing as a fiscally responsible option and we’re seeing more and more homeowners in this demographic take advantage of refinancing their mortgages,” said Joe Tyrrell, chief operating officer at Ellie Mae. “Heading into 2020, lenders should proactively reach out to prospective millennial homebuyers whose likelihood of purchasing a home has now increased due to these historically low interest rates.”
Separately, the latest quarterly National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) found the majority of single-family and multifamily housing production was occurring geographic areas where at least 26 percent of the population consisted of Millennials. This included both major metro areas such as the top California housing markets, Seattle, Portland, Boston and Washington, D.C., along with more rural counties in Ohio, Kansas and Missouri.
The HBGI concluded these counties accounted for 62 percent of the entire U.S. population and 59 percent of single-family home building nationwide. However, lack of inventory and affordable homeownership problems are also a problem in these markets.
“The HBGI highlights the ongoing challenge of housing supply, particularly for younger households seeking affordable rental housing or attempting to gain a toe-hold on the homeownership ladder,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “While counties that have greater concentrations of millennials are where most of the single-family and multifamily construction in the U.S. is occurring, those same areas have recently seen relatively weaker growth rates for home construction.”
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