Refinance Activity Among Millennials Dropped in December

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According to the latest Ellie Mae Millennial Tracker, the refinance share of originations among millennials in December dropped for the second straight month, decreasing from 31% in November to 27%.

Ellie Mae says this 4% decline represents the largest month-over-month drop in refinance share during 2019.

The decrease in refinance share in December happened as interest rates on 30-year notes increased to 3.95%, up slightly from November. Prior to November, interest rates had fallen 10 months in a row.

From November to December, refinance share decreased five percentage points for conventional loans, which represented 71% of all loans closed during the month by millennials. Following the larger trend for all loan types, interest rates on conventional loans increased from 3.97% to 3.99%.

Despite a decrease in refinance share in December, it took a day longer to close refinances than in November. Comparatively, time-to-close held steady at 43 days for all loan types and 42 days for purchase loans.

Refinance activity faltered slightly in December, but refinance share is up 17% year-over-year.

Average interest rates peaked at 5.12% for all 30-year loans in December 2018 and have since dropped over a full percentage point to 3.95%.

Comparing data from December 2018 to December 2019, other notable trends include the following:

  • The average FICO score for all millennial borrowers went from 721 to 728
  • The share of conventional loans increased 3%, while the FHA share dropped 3%
  • The average time to close for all loans remained flat, at 43 days

“The refinance boom potentially ending is a major topic of discussion in the industry at the moment, but the reality is that if we take a step back and look at the last year, overall the market is still favorable for homeowners looking to refinance and millennials considering purchasing their first home,” says Joe Tyrrell, chief operating officer at Ellie Mae.

“Whether millennials are refinancing more or increasing their purchase activity, the reality is that this demographic plays a central role in shaping the market,” he explains. “Lenders can best set themselves up for success by understanding that, throughout the mortgage process, millennials want automation and human touch working in concert to create the best customer experience possible.”

For more information about the Millennial Tracker, click here.

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