Millennials aging into homeownership is one of the reasons the housing market continues to boom, and new mortgage purchases are surging despite the ongoing economic uncertainty surrounding COVID-19. But a new study from mortgage processing software giant ICE Mortgage Technology — formerly Ellie Mae — revealed millennials are also participating in the massive increase in refinances.
Refinances, according to the data, accounted for 43 percent of all closed loans for millennials in September, an increase of 3 percent from the prior month. With the summer homebuying season coming to a close, purchases for millennials dipped for the second consecutive month.
“We have seen a steady increase in refinances among millennials over the past month, as homeowners took advantage of historically low interest rates,” Joe Tyrrell, president of ICE Mortgage Technology, a division of Intercontinental Exchange, Inc., said in a statement. “However, the bulk of the millennial generation is still entering the market as first-time homebuyers and they’re swooping up the limited inventory that is available in most markets.”
Refinances, in general, accounted for 51 percent of conventional loans in September, up from 48 percent the month prior and the highest level since June.
The market composite index published weekly by the Mortgage Banker’s Association, meanwhile, found that refinance volume was up 88 percent year-over-year this week, while purchase volume was up 25 percent year over year.
The rate for a 30-year fixed-rate mortgage stayed near record lows at 3.01 percent, according to the survey, but the rates for 15-year fixed-rate loans, FHA loans and jumbo loans all fell to new MBA survey lows, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“The drop in rates spurred an uptick in demand for refinances,” Kan said. “Activity increased over 6 percent [week over week], with borrowers notably seeking conventional and government loans. ”