Thanks, millennials: Younger generation props up mortgage market

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

TRD 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
(iStock)

A foreclosure crisis is looming — but here’s what’s different from 2008

A foreclosure crisis is looming — but here’s what’s different from 2008
Sales of existing homes in the U.S. hit a 14-year high last month, according to a new report. (iStock)

US home sales hit 14-year high

US home sales hit 14-year high
An increase in mortgage applications came despite interest rates ticking up (iStock)

Applications for home mortgages surged last week

Applications for home mortgages surged last week
United Wholesale Mortgage Mat Ishbia and Gores Holdings IV CEO Alec Gores (Photos via United Wholesale Mortgage and Gores)

United Wholesale Mortgage goes public with $16B valuation

United Wholesale Mortgage goes public with $16B valuation
(iStock)

Banks required balloon payments, stayed mum on foreclosure moratorium

Banks required balloon payments, stayed mum on foreclosure moratorium
Fed Board Governor Lael Brainard (Getty, iStock)

Fed wants banks to step up lending in low-income areas

Fed wants banks to step up lending in low-income areas
Wall Street investors are prepared to buy and turn single-family homes into rentals when forbearance programs expire and homeowners look to sell. (iStock)

Wall Street investors bet on single-family rentals as mortgage payments stack up

Wall Street investors bet on single-family rentals as mortgage payments stack up
Eviction filings have fallen in several major cities after a second federal eviction moratorium came into effect early September. (iStock)

Eviction filings fall after Trump moratorium: study

Eviction filings fall after Trump moratorium: study
arrow_forward_ios

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

Loading...