Rate uncertainty drives millennials to refinance

Millennial borrowers returned to refinances in the fourth quarter, with December hitting the highest percentage of refinances since February’s 2017 high of 17%, according to the latest Ellie Mae Millennial Tracker.

Refinances made up 15% of all closed loans during month, which marked the third consecutive month of steady activity share. Closed purchase loans accounted for 84%, which is down from June’s 2017 peak of 90%.

“With seasonality and low inventory levels at the end of the year, millennial borrowers continued to take advantage of refinance options during the fourth quarter,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “Many may have been driven by a desire to take advantage of low interest rates given uncertainty about potential rate hikes in the new year.”

Additionally, Ellie Mae said that conventional refinances held steady with the 19% share they have had since October. FHA refinance loans stayed at 6% from the month prior. The percentage of conventional purchase and FHA purchase loans also remained unchanged from November to December at 80% and 94%, respectively.

Ellie Mae data also revealed that millennial borrowers took an average 44 days to close all loans in December, remaining unchanged from the previous month. Also, refinances were closed after an average 45 days, while the time to close a purchase was 42 days, both remaining unchanged since June. Average FICO scores for all closed loans fell one point from the month prior to 722.