Purchase activity among millennials is again starting to gain steam, according to the latest data from Ellie Mae’s Millennial Tracker report.
Purchase share — the percentage of all loans closed that were purchase mortgages — grew to 56% in June, up 9 percentage points from the previous month. It’s the second straight month of purchase share growth, bringing purchase share to its highest level since the pandemic began impacting the country in March.
The increased June share helped millennials account for more closed purchase loans than any other generation in the second quarter.
“Millennials are emerging as a dominant force relative to driving the purchase market forward in the next few years,” said Joe Tyrrell, chief operating officer at Ellie Mae. “Our data indicates that while we’re currently seeing an upturn in millennial purchase activity, the true boom is just starting. We expect that their entry into the market, as they reach prime homebuying age, will fuel purchase transactions in 2021, 2022 and 2023.”
With even more young first-time buyers set to seek homes in those years, Tyrrell called millennials “the single biggest opportunity in the housing market today.”
“Per U.S. Census data, there will be over 4 million millennials reaching the age of 29 to 30, each year for the next several years,” he said. “That is important, because our data shows that is the average age when millennials enter the homebuying market.”
Recently, millennial purchasing power has been helped by historically low mortgage rates, with the average interest rates for millennial mortgages dropping to 3.36% in June. That’s the lowest average rate for millennials since Ellie Mae began keeping track, beating the previous low of 3.42% set just one month prior. Younger millennials, aged 21 to 29 years old, secured an interest rate of 3.35%, while older millennials secured a slightly lower rate of 3.34%.
With millennial buyers used to digital solutions in other consumer transactions, Tyrrell said that it’s important that the mortgage industry continues to adopt technological innovations to appeal to the growing millennial buyer base. The observation comes with closing time for millennial loans on the rise, climbing every month since the onset of the pandemic. Average closing time for millennials grew from 43 days in May to 45 days in June, with refinance closing time in particular rising five days from 44 to 49 during that timeframe.
“With every passing day, it becomes more apparent just how critical digital mortgage technology is to lenders right now,” said Tyrrell. “Capabilities like online applications, automatic updates and e-closing offer millennial customers the seamless digital experiences they expect while freeing up time for the human interaction necessary to answer questions or concerns they may have as they navigate the homebuying process for the first time.”