Millennials, Gen Z push VA loan volume to a record in 2021

Young borrowers led gains in Veterans Affairs-sponsored home purchases in fiscal year of 2021, while the total volume of VA-backed loan activity hit a new high, according to Veterans United Home Loans.

“Millennial and Gen Z veterans accounted for more than half of all VA purchase loans in a record year for this historic benefit program,” said Chris Birk, vice president of mortgage insight and director of education at Veterans United Home Loans, in a blog post. “Gen Z in particular is starting to make its presence felt in markets across the country.”

Overall, the volume of VA-sponsored loans increased to 1.44 million from 1.25 million the previous fiscal year, a jump of 15.6%, while average loan amounts rose to $310,174 from $301,044. With interest rates at consistent lows throughout the reporting period, refinances predominated, accounting for 69.2% of originations, while purchases took 30.8%.

The total number of VA purchase mortgages rose by 3.6% year over year, the 10th consecutive annual increase. Despite home price appreciation accelerating to record levels, the percentage of young borrowers taking advantage of the VA’s loan program also grew on a yearly basis. Millennials and Gen Z veterans accounted for 52% of all VA purchase mortgages in fiscal 2021, a 6.6% increase from 2020. Although there were more millennials than Gen Z buyers, the number of Gen Z borrowers taking VA purchase loans grew by 84%.

The greatest number of these new purchases came in Virginia Beach, home to the largest active-duty military population in the country. The area saw 10,477 VA-backed loan applications from millennial and Gen Z veterans, a 22.8% increase from the prior fiscal year’s 8,532. New purchase loans among younger borrowers grew in the metropolitan Washington area by 16.2% to 8,099 compared to 6,969 in the previous fiscal period. Rounding out the top three, San Antonio increased its volume to 5,541 from 4,919 year over year, a 12.6% jump.

Virginia Beach was also one of seven metropolitan statistical areas experiencing greater than 20% growth among millennial and Gen Z VA purchases, while 22 communities across the country recorded increases of more than 10%. Home buying spiked the most in smaller military communities, such as Hinesville-Fort Stewart, Georgia, which saw 64.8% growth, Anchorage, Alaska, with 28.3% and Savannah, Georgia with 26.1%.

Although the average age of the first-time buyer has risen to 33 (up 14% since 1981), millennials are the largest adult generation in the U.S. and fueled home buying activity last year. However, a recent Hometap survey also revealed a knowledge gap among millennial homeowners, more than half of whom were unaware of the tappable equity in their homes.