Millennials are not being put off mortgages by the rising rates

The share of millennial homebuyers closing purchase loans continues to rise even as mortgage rates challenge budgets.

The latest Ellie Mae Millennial Tracker shows that 89% of loan volume in September was for purchase loans, up 3 percentage points from a year earlier.

The share of closed purchase loans that were conventional mortgages was up 7 percentage points from a year earlier at 88%; and conventional also took the largest share of all loans (68%) compared to FHA (27%) and VA (2%).

“Despite rising interest rates, Millennials are still looking to buy homes,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “We’re still seeing the majority of Millennial loans fall into the conventional loan category, and with interest rates increasing, there is an even greater opportunity for the industry to educate these buyers on all of the options that they have available to them, including some of the higher loan-to-value products and FHA loan programs.”

Refinances accounted for 10% of all home loans to Millennial borrowers and 11% of conventional loans. 28% of closed VA loans in September 2018 were for refinances, a noticeable jump from 21% the month before.