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46 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Closing the Gap Falling mortgage rates are causing refinances to rise, with the share of purchases dropping to its lowest levels since 2015. E llie Mae's September Origination Report found that 49% of all loans closed for the month were refinances, as the number of purchases fell to 51%—the lowest percentage since March 2015. September was also the first month in 2019 that conventional refinances rose to more than 50% of total conventional loans, also accounting for 55% of conventional loans for the month. Conventional purchases fell to 45%, FHA refi- nances increased to 28% from 27%, while FHA purchases dropped to 72%. Refinances for VA loans rose month-over-month from 34% to 37%. "The continued decline in inter- est rates is driving the refinance revitalization that is now account- ing for almost 50% of all closed loans in the month," said Jonathan Corr, President and CEO of Ellie Mae. "The market is still anticipating further rate cuts by Treasury, so lenders should capi- talize on leveraging technology to ensure they are responding to the growing number of refinance op- portunities that come their way." Ellie Mae reports that the time to close all loans rose slightly to 43 days from 42 days the month be- fore. Time to close a refinance loan was unchanged at 39 days and closing on purchase loans rose to 46 days in September—a marginal increase form 45 days in August. The share of adjustable rate mortgages fell 4.7%, which is down from August's 5.3%. The average FICO score for all closed loans increased to 737 from 734 the month prior. Ellie Mae also found that the average 30-year mortgage rate fell for the ninth-consecutive month to 3.93% from 4.07% in August. Freddie Mac's latest Primary Mortgage Market Survey revealed that the average 30-year fixed-rate mortgage rose slightly to 3.69%. "Despite this week's uptick in mortgage rates, the housing market remains on the upswing with improvement in construction and home sales," said Sam Khater, Freddie Mac's Chief Economist. "While there has been a material weakness in manufacturing and consistent trade uncertainty, other economic trends like employment and homebuilder sentiment are encouraging." The Next Generation An influx of new potential buyers could provide just the boost that housing needs. C ommentary from Forbes suggests that the Ameri- can housing market is on the verge of the largest housing boom on record, and with an insider saying the market can thank the millennials. The piece, penned by Stephen McBride, points out that American has a severe is- sue with housing inventory. Census Bureau data shows an average of 1.5 million homes were built each year since 1959. However, just 900,000 homes have been built annually since 2009. Fewer homes have been built in the past decade than in any decade since the 1950s. However, McBride said Barry Habib, founder and CEO of real estate advisor MBS Highway, said the market is about to see an influx of millennial buyers that could turn the housing market around. Habib was quoted as saying, "… the housing market is like a roller- coaster trainer car. When the first few train cars go over the bump, it's kind of slow. The real momentum kicks in when more and more cars go over the hump. In the past year or two, the first wave of young homebuyers came into the market. But for the next decade, tens of millions of millennials will hit home-buying age." New data from ValuePenguin, however, says that millennial homeownership fell 20% between 2009 and 2016. The report found that the population of homeowners under the age of 35 fell from 9.2 mil- lion in 2009 to 7.3 million in 2016. Additionally, the number of mil- lennials who are renting during that same period increased from 14.6 million to 15.2 million. ValuePenguin said that these millennial home- owners accounted for more than 12% of all U.S. homeown- ers in 2009. Also, within the millen- nial age group, the number of homes owned by millenni- als fell by 18.5% over eight years. The trend of declining millen- nial homeownership reversed in 2017, which is also the first year since 2009 that the number of millennials renting did not increase. Millennial home- ownership grew to 7.5 million in 2017, while the share of renters under the age of 35 stayed at 15.2 million. ValuePenguin states that nearly 67% of all millennial house- holds were renters as of 2017. With more potential buyers entering the market, McBride points out that builders need to start building more houses. "Builders have been super cautious over the past decade," Forbes states. "Who can blame them? Many saw their friends and competitors go out of business when the market crashed. But with the housing boom showing no signs of slowing, they're finally getting to work." "The market is still anticipating further rate cuts by Treasury, so lenders should capitalize on leveraging technology to ensure they are responding to the growing number of refinance opportunities that come their way." —Jonathan Corr, President and CEO of Ellie Mae "Builders have been super cautious over the past decade. Who can blame them? Many saw their friends and competitors go out of business when the market crashed."