Millennials new home loans increasing despite interest rates

There was a rise in the share of mortgage loans made to millennial homebuyers for the purchase of new homes in February.

Ellie Mae figures show that, despite rate rises, 83% of all loans for millennials were for new homes, up 2 percentage points from January, although down 3 points year-over-year.

Millennial purchase loans have been growing their share in recent months and now account for 45% of all closed loans. Meanwhile purchase loans for other generations have slipped from 57% to 55% between December and February.

Conventional loans remain the more popular choice for millennials (68%) compared to FHAs. FHAs remained at a 28% share, the same as in January and the lowest it’s been since 2016.

“According to the U.S. Census, Millennials are now officially the largest group of homebuyers in the U.S.,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “Despite rising interest rates, we’re continuing to see Millennials exercise their purchase power across the United States as they represent 45% of total closed purchase loans in February. And with the spring homebuying season now underway, we’ll see if the activity increases for this growing group of homebuyers.”

The average FICO score for millennials has hovered around its February score of 724 since last summer.