Survey results show a different kind of mortgage borrower
Millennials are entering the housing market, many for the first time, and fighting over the limited housing inventory available, according to May’s Millennial Tracker report from Ellie Mae, a provider of software solutions and services for the residential mortgage industry.
However, the reasons they are buying homes are not from the usual motivation: Starting a family.
The tracker showed the top five markets with the highest percentage of Millennial borrowers including Hutchinson, Minnesota; Wahpeton, North Dakota-Minnesota; Austin, Minnesota; Williston, North Dakota and Anniston-Oxford-Jacksonville, Alabama.
A closer look at Hutchinson, Minnesota, the hottest Millennial market, showed a surprising demographic of Millennials buying homes.
“Our data shows that Millennials are continuing to establish roots where housing is more affordable and there are increasingly more jobs,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy.
“While overall, less than half, 48%, of Millennials who closed loans in May were single, in markets like Hutchinson, Minn., the majority of borrowers were single men,” Tyrrell said. “This suggests Millennials may be embracing homeownership in these areas for reasons other than what we have historically seen, which was family formation.”
The report also showed more Millennials are using conventional loans, as these loans made up 62% of all loans made to Millennials, up from 61% in April.
The percentage of Millennials who took out FHA loans fell one percentage point to 34% in May, continuing the one point per month slide which began in March. But while the share of FHA loans dropped, the number of days to complete and FHA refinances shot up to 55 days. This is nearly a week longer than the 49 days it took to close in April.
VA loans, however, grew quicker as it shaved off a few days from the time to close. VA loans closed in an average 42 days in May, down from 45 days in April.