FHA loan interest rates continued to decrease to historic lows in October, spurring millennials to take advantage of the government-backed home financing option, according to the latest Ellie Mae Millennial Tracker. Sixteen percent of home loans closed by millennial borrowers in October were FHA loans, secured with an interest rate of 2.99%. That is the lowest these rates have been since Ellie Mae began tracking this data in 2016.
“FHA loans were especially popular among younger millennials under age 30,” observed Joe Tyrrell, president of ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE). “Nearly a quarter of them chose this financing option, in part because of the more flexible qualification criteria; however, older millennials preferred conventional loan products.”
Ninety-three percent of all closed FHA loans to millennials were for purchases in October, down one percentage point from September, while seven percent of them were for refinances. Purchase loans closed by millennial borrowers – across all loan types – held steady month-over-month at 56 percent, as did refinances at 43 percent.
Days-to-close across all loans remained the same from September to October at 49 days. FHA loans also took 49 days to close, which was a day longer than the prior month. There were also slight upticks in days-to-close for Conventional loans month-over-month from 49 to 50 days, and for VA loans from 55 to 60 days.
The Ellie Mae Millennial Tracker provides more insights into two groups of millennial homebuyers: older millennials between 30 and 40 years old, and younger millennials between 21 and 29 years old.
The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80% of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass all-in-one mortgage management solution. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type.