MReport May 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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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 Older Millennials Driving Refinance Surge Refinance share for millennials at highest rate since Ellie Mae began tracking data in 2016. T he refinance share for all loans closed to millennial homeowners in February was 34%, which is tied for the highest share since Ellie Mae began tracking this data in 2016. Conventional loans represented 75% of all loans closed by this group for the month. The refi- nance share rose to 41% as average rates for this loan type fell to 3.86% from 3.98%. The Ellie Mae Millennial Tracker now divides millennials into two groups—older millenni- als (between 30 and 40-years-old) and younger millennials (be- tween 21 and 29-years-old). Older millennials accounted for 41% of all loans closed for millennials, compared to just 18% for younger millennials. Younger millennials saw their average interest rate on all loans fall to 3.83% from 3.9% month-over- month. The average rates for older millennials fell monthly to 3.85% from 3.95%. "Economic impacts due to the coronavirus (COVID-19) played a role in lowering interest rates in February, and millen- nial homeowners were quick to take advantage and refi- nance their mortgages," said Joe Tyrrell, Chief Operating Officer at Ellie Mae. "While rates are currently favorable for consum- ers, we're closely monitoring how COVID-19, and the resulting rate cut from the Federal Reserve, will impact every step of the home- buying and refinancing process and, in turn, the mortgage finance industry. Lenders who have in- vested in the requisite technology will be better positioned to work with buyers and owners who are increasingly interested in taking these processes virtual." Ellie Mae also found the time- to-close for refinances dropped 12 days month-over-month, decreas- ing to 38 days from 50 days. Times to close on all loans by millennials in February dropped from 47 days to 41 days, on aver- age. Refinances may continue to grow as Freddie Mac reported that the average 30-year fixed-rate mortgage dropped to 3.33% for the week ending on April 2. "Mortgage rates have drifted down for two weeks in a row and that drop reflects improve- ments in market liquidity and sentiment," said Sam Khater, Freddie Mac's Chief Economist. "While the market has stabilized relative to prior weeks, home- buyer demand has declined in response to current economic conditions. The good news is that the pending economic stimulus is on the way and will provide support for both consumers and businesses." The prior weeks' average was 3.50% and last year it was 4.08%.

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