Refinance activity was driven by lower mortgage rates
Low mortgage rates prompted greater refinance activity among millennials in May, but the rise sparked a jump in the time to close those loans.
Ellie Mae’s Millennial Tracker shows that average interest rates on all 30-year notes to Millennials dropped month-over-month from 4.61% in April to 4.53% in May, the lowest rate since February 2018.
By loan type, the average interest rate for Conventional loans dropped from 4.55% to 4.48%, FHA loans fell from 4.71% to 4.64% and VA loans lowered from 4.21% to 4.08%.
A resulting spike in activity pushed the time to close for all refinances up from 36 days in April to 42 days in May.
“Time to close has been trending downward recently, but in May, the volume of activity pushed the mortgage finance industry to a tipping point where it spiked dramatically,” said Joe Tyrrell, chief operating officer at Ellie Mae. “As the digitization of the mortgage process continues to evolve, increased automation will help borrowers and lenders close all loan types more efficiently, even during periods of increased activity.”
For all loans closed in May, 71% were Conventional and 25% were FHA, 2% were VA and 3% were other loan types.
The average age for Millennial borrowers increased slightly from 30.2 in April, to 30.3 in May while the average FICO score remained the same at 721.
