Millennials are unfazed by the short supply of starter homes in a competitive market based on the rising share of December’s purchase mortgages, according to Ellie Mae’s Millennial Tracker.
Purchase loans occupied 88% of millennial originations in December, an increase from 84% year-over-year. With interest rates rising from the year before, the share of purchase originations is up across the board.
Conventional mortgages took up 68% of millennial’s closed loans for December — an annual growth of 2 percentage points. Federal Housing Administration loans dropped 2 percentage points year-over-year, accounting for 27%. Veterans Affairs loans occupied 2% of closed mortgages and the residual 3% were unspecified loan types, both remaining static from a year ago.
The percentage shares for all four loan types held constant from October. The average FICO score for millennial borrowers dropped a point year-over-year to 721 December 2018.
“Many millennials are prioritizing homeownership and rather than being deterred by a tight market, they’re increasingly competing for available homes or moving to areas where inventory is more robust,” Joe Tyrell, executive vice president of corporate strategy for Ellie Mae, said in a press release.
The average loan amount in December was $195,187, up year-over-year from $190,695 and month-over-month from $192,570. The gender discrepancy skewed 59% male to 31% female with 9% unspecified. Overall, 52% of the primary borrowers were listed as married compared to 48% single.
“The average age for a millennial homebuyer in December was 29.5 years old, the lowest for any month in 2018. This may be driven in part by younger borrowers who no longer feel the need to wait for a typical life event like marriage before buying a home. In fact, from 2016 to 2018, 63% of borrowers between the age of 20 and 29 were single when they closed their loans,” Tyrell said.