While millennials took advantage of mortgage rates falling to two-year lows, increasing their refinance share, teaching them about low down payment loan products would help grow home ownership for this group, according to Ellie Mae.
The average 30-year note rate continued dropping to 4.19% in July, marking the lowest rate seen since November 2017. As a result, the share of millennial refis jumped to 23% from 8% a year ago and 14% in June.
"We've seen interest rates for millennials drop consistently throughout 2019, but from April through June, the refinance market was essentially flat," Joe Tyrrell, chief operating officer at Ellie Mae, said in a press release. "In the months leading up to July, consumers believed that rates would continue to decrease, and they were correct. Now, millennials are reaping the rewards and locking in historically low rates."
The time to close a loan fell to 41 days from 42 days the year prior, but bumped up a day from June. About 74% of mortgages completed in July were conventional, and 22% were Federal Housing Administration loans. U.S. Department of Veterans Affairs accounted for 2%, while other unspecified loans occupied the remaining 2% of closed mortgages.
Millennial homeownership could rise even higher if more mortgage knowledge were bestowed to them.
"Lenders need to do a better job of educating potential homebuyers on various loan types, especially with rates as low as they are," said Tyrrell. "FHA loans, for example, have more flexible credit requirements and require smaller down payments, which should be perfect for cash-strapped millennials. However, that demographic is not taking advantage of these types of loans."
The average millennial FICO score rose to 728, up from 723 a year ago and 725 in June. The millennial borrowers' average age also rose, inching up to 30.5 years from 29.8 in July 2018 and June's 30.4. Married individuals represented 55% of loans closed, while 45% of primary borrowers were single. About 60% were male, 31% female and 10% unspecified.
