I\’ve got more Millennial mortgage data available for you, courtesy of the monthly Ellie Mae Millennial Tracker.
This is often a heavily watched group because they\’re expected to carry the housing marketplace to the next stage, hopefully higher.
While the word Millennial gets thrown around considerably, Ellie Mae defines it as anyone born between 1980 and 1999. Some have wider date ranges, and other shorter.
Anyway, we already know that Millennials favor adjustable-rate mortgages, but it surely turns out they\’re also pretty keen on conventional loans too.
63% of Millennial Mortgages Were Conventional
In June, nearly two-thirds (63%) of mortgages manufactured to Millennial borrowers were conventional home, aka non-government loans.
The overwhelming remainder (32%) were FHA loans, which require just a 3.5% down payment, and for that reason, are favorable to young cash-strapped borrowers.
The rest were probably the variety of VA and USDA loans, which enable for zero down payment, but aren\’t as widely issued.
The share of FHA loans peaked in February and March of this year at 36%, but has since fallen steadily. Meanwhile, the regular share rose from 60% to 63% in that time.
Ellie Mae executive vice president of corporate strategy Joe Tyrrell said this either means Millennials are able to afford more house without a government guarantee, or they do not have the education on loan options much like the FHA.
[See FHA vs. conventional differences here.]
90% of Millennial Mortgages Were Purchase Loans
As expected, a very large share of Millennial mortgages were for home purchases, seeing as this group is relatively young and may even include a lot of first-time home buyers.
In June, 90% of all closed loans to this age cohort were purchases, while using remaining 10% refinances.
Among FHA loans only, 96% were purchases and 4% were mortgage refinances, which again adds up because they\’re often utilized to buy a home with little down, nevertheless the costly mortgage insurance means they less desirable to hold onto.
Once these young buyers build some equity, they could refinance their FHA loan to a conventional loan to drop the expensive MI and even perhaps get a lower mortgage rate.
The transaction mix for conventional loans was still being purchase heavy at 87%, but refis constructed a more sizable 12%.
If you\’re wondering what sort of kidos (sorry, young adults) stack up with the overall market, the conventional share for all those borrowers in June was 64%, while FHA loans taken into account 22% of volume. VA took 9%.
Meanwhile, the refi share was 32% as well as the purchase share was 68%.
Millennials continue to keep target affordable cities in the Midwest, with Muscatine, Iowa, (average the amount you want: $143,988) Watertown, South Dakota, ($138,492) Frankfort, Indiana, ($125,069) Oshkosh-Neenah, Wisconsin, ($150,751) and Quincy Illinois/Missouri ($107,589) the most notable housing markets nationwide.
As you will find from the map above, Millennials have a tougher time getting loans over the West Coast and New england compared to the Midwest and South. Price has a lot to do with that.
Are Bachelor Parties a Problem?
A new, odd analysis from Zillow claims young prospective buyers might be spending too much of their money on bachelor and bachelorette parties.
Apparently these gatherings costs up to $14,000 during peak wedding attending years, which is 34% of a down payment on a median home.
The math is nine soires at $1,532 a bit for $13,788 in total cost.
I’m sure Millennials are done with hearing about all the things they should be spending their income on…and frankly I don’t blame them. Have a good time, party now, and buy a house eventually.
Other Millennial Mortgage Datapoints (from March C May 2017)
Gender: 64% of borrowers male
Marital status: 51% married
Average age: 29.5
Average amount you borrow: $181,593
Average appraised value: $216,116
Average LTV: 88%
Average DTI: 24/37
Average note rate: 4.304%
Average FICO score: 721
Average days to close: 42