Thanks, millennials: Younger generation props up mortgage market

Average interest rate for borrowers born in 1980s and 1990s was 3.25 percent

National /
Sep.September 03, 2020 01:30 PM
Millennials made up 61 percent of home loans in July (iStock)

Millennials made up 61 percent of home loans in July (iStock)

The purported laziest generation in history is propping up the mortgage market.

Millennials made up 61 percent of home loans in July, up five percentage points from June, according to a report from mortgage software company Ellie Mae.

Millennials are motivated to buy homes in part by the average interest rate having dropped to 3.25 percent — the lowest since Ellie Mae began tracking it. Mortgage rates have remained historically low as the Federal Reserve tries to incentivize home buying and lending amid a sagging economy.

The majority of mortgage loans made in July were to younger millennials, born between 1991 and 1999. In this demographic, 81 percent of the loans are for home purchases and 19 percent for refinances.

Among older millennials (born in the ’80s), 53 percent of their loans were for purchases, according to Ellie Mae.

Younger millennials also turned to government backed loans such as Fannie Mae or Freddie Mac in July. About 97 percent of Federal Housing Administration loans for purchases were for younger millennials, the highest percentage since Ellie Mae started tracking this data in 2016.

Younger millennials closed loans with an average FICO score of 728 in July, compared to older millennials’ 747.

The housing market has been one of the few bright spots during the coronavirus. Existing-home sales rose 25 percent to a seasonally adjusted annual pace of 5.86 million in July, according to the National Association of Realtors. It was the largest monthly increase on record.

Most of the demand has come from people looking to take advantage of low mortgage rates as well as buyers seeking bigger homes after pivoting to working from home.


Related Articles

arrow_forward_ios
It's harder than it's been in a decade to afford a mortgage
It’s harder than it’s been in a decade to afford a mortgage
It’s harder than it’s been in a decade to afford a mortgage
 An industry report says that mortgage lenders and investors are ill-prepared for the growing challenge of climate risk. (iStock)
Mortgage market stakeholders are unprepared for growing climate change threats
Mortgage market stakeholders are unprepared for growing climate change threats
Mortgage availability improves just as rates set to rise
Mortgage availability improves just as rates set to rise
Mortgage availability improves just as rates set to rise
Lennar falls short on home deliveries, blames supply chain
Lennar falls short on home deliveries, blames supply chain
Lennar falls short on home deliveries, blames supply chain
For the first time this year, homebuilders received a respite from rising materials costs, driven by a drop in softwood lumber. (iStock)
Homebuilders finally get a break on material costs
Homebuilders finally get a break on material costs
Pittsburgh is the place to be for affordable mortgage payments. San Jose and San Francisco? Not so much. (iStock)
Ten most/least expensive cities to buy a median-priced home
Ten most/least expensive cities to buy a median-priced home
Real estate stocks climbed higher in August despite the end of a national eviction moratorium and uncertainty over how the delta variant would affect retail spending and a return to the office. (iStock)
Real estate stocks dodge obstacles, charge forward in August
Real estate stocks dodge obstacles, charge forward in August
A statistical analysis found that lenders were 80 percent more likely to reject Black applicants for mortgages in 2019. (iStock)
Secret bias in mortgage algorithms hurts borrowers of color
Secret bias in mortgage algorithms hurts borrowers of color
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...