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Millennials Drive Competitive Purchase Market

07.14.2021

The percentage of purchase activity to total closed loans among applicants born 1980-1999 increased for the third consecutive month, according to the ICE Mortgage Technology Millennial Tracker.

In May, 67% of loans closed by millennials on the Encompass by ICE Mortgage Technology origination platform were for purchases, up from 61% in April 2021 and 51% in March 2021.

The average purchase loan amount for this demographic is $220,279. The tracker showed 84% were conventional loans, while 13% were Federal Housing Administration loans and 1% were VA loans. (2% unspecified).

Purchases accounted for 82% of loans closed by younger millennials (born between 1991 and 1999), up from 78% in April. For older millennials (millennials born between 1980 and 1990) purchases accounted for 60% of all closed loans, up from 53% in April.

“Across the country, we’re seeing a strong and competitive purchase market, particularly among millennials,” said Joe Tyrrell, President of ICE Mortgage Technology.

Average FICO scores for millennial borrowers decreased for the fourth consecutive month. In May, average FICO scores for borrowers of this generation dipped to 732, down from 734 in April and 739 in March.

“With FICO score requirements loosening, millennials are taking advantage of the current environment to continue to jump into homeownership,” Tyrrell said.

May was also the second consecutive month in which purchase share for older millennials was larger than refinance share. In May, 60% of loans closed by older millennials were purchases while 38% were refinances. Older millennials have not closed more purchases than refinances since August 2020, when purchases by the cohort accounted for 52% of closed loans.

The average age of millennial borrowers is 32.9. In May, the average borrower age was unchanged from April’s average of 32.4 years old.

Average days to close a loan for all millennial borrowers decreased to 46, down from 48 in April. Days to close a refinance loan decreased month-over-month from 52 in April to 50 in May, while days to close a purchase loan held steady at 44 days, according to the tracker.

Three in five millennial/Generation Zs who responded to a recent Zillow survey said they plan to use money saved during the pandemic toward a down payment on a home. Behind "paying for everyday living expenses," that was the most common way respondents who saved over the past year said they plan to spend their money.

Zillow Researcher Manny Garcia reported that "homeownership still appears to be a priority and aspiration among those sometimes called the rent forever generation," referring to a Business Insider article on millennials opting out of homeownership.

The ICE Mortgage Technology 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 ICE Mortgage Technology’s Encompass. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type.

by Christina Hughes Babb (via www.themreport.com)

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