Millennials entering home market are the oldest ever

Even as more borrowers between 21 and 40 leveraged the historically low mortgage rates in January, the average age rose to a report high, a sign that they are delaying homeownership, according to ICE Mortgage Technology.

The average age for millennial borrowers swelled to 33 years from 31.3 in January 2020 and 31.9 in December. The next highest average age came in April 2020 at 32.3 years.

Those borrowers locked in an average 30-year interest rate of 2.881% in January — a declining number that keeps hitting new record lows for the Millennial Tracker. The rate plummeted from 3.935% the year prior and from 2.928% in December.

With all-time low mortgage rates allowing buyers to afford more house, the average millennial loan amount surged by $10,241 annually and $6,953 monthly to a report high of $221,459.

Married individuals represented a 61% segment of closed loans, up from 55% the year before and an uptick from 60% the month earlier. Overall, about 56% of primary borrowers were male, 29% female with 15% who didn't specify.

Marriage is the life event that usually precedes a home purchase. While married couples still cover the majority of homebuyers, those figures could start looking different with millennials marrying later in life, more unmarried couples buying homes together and some even forgoing big weddings in favor of spending towards a down payment — especially during the pandemic.

“Weddings often cost relatively the same as a down payment in some cities,” said Jess Kennedy, Beeline’s co-founder, general counsel and chief compliance officer. “If you combine couples increasingly wanting to live together before getting married, and the desire to pay their own mortgage rather than someone else’s, it makes sense why so many younger couples are choosing to buy a home before they celebrate the big day.”

The average millennial FICO score rose to 742 from 728 year-over-year and 739 month-over-month as credit standards remain constricted.

Amid the extreme competition, millennials will go to great lengths to secure their first homes. Nearly 80% of millennials would buy a home sight unseen, including 29% who would after only seeing photos or a virtual tour, according to Clever Real Estate’s 2021 Millennial Home Buyer Report.

“Millennial home buyers, and homebuyers in general, are so eager to buy homes in this seller's market that they may make decisions they wouldn't in a less competitive market,” a representative from Clever said in a statement to NMN. “Buying sight unseen is a risky bet millennials are willing to make.”

Conventional mortgages occupied an 84% share of loan originations compared to 71% year-over-year and 81% month-over-month. Federal Housing Administration loans fell slightly to 13% and U.S. Department of Veterans Affairs loans stayed static at 1%. Other unspecified types of financing represented the remaining 2%.

Refinances took the lion’s share of originations, covering 53% as millennials — especially the older contingent who’ve presumably owned for longer — jumped at the low mortgage rates. That's up from 31% a year ago and 46% the month earlier. The purchase share dropped to 46% from 68% year-over-year and 54% month-over-month. As volume continues to churn, time to close ballooned to 54 days from 47 in January 2020 and 52 days in December.

The splits change when looking at the data between older borrowers (between 30 and 40 years old) and younger borrowers (between 21 and 29 years old) millennials.

The elder group's January purchase share made up 40% compared to 71% for the younger group. By loan type, conventional mortgages accounted for 86% share for older millennials versus 74% for younger while FHA loans accounted for 11% and 22%, respectively. Older millennials had average FICO scores of 748 while the younger set — who haven't accumulated credit for as long — hit 729.