Growing home prices and climbing interest rates didn’t stop millennials from buying houses in October, Ellie Mae said.
Even accounting for both deterring factors, purchase loans occupied 88% of originations in October, up from 84% the year prior, according to Ellie Mae’s monthly Millennial Tracker.
Conventional mortgages took up 68% of this age demographic’s closed loans for the month, 27% got a Federal Housing Administration loan and 2% a Veterans Affairs loan. The remaining 3% of the closed mortgages were unspecified loan types.
"Although housing prices and interest rates are still rising at a faster pace in 2018 than they have in previous years, those trends are not yet stopping millennials from purchasing homes and putting down roots," Joe Tyrell, executive vice president of corporate strategy for Ellie Mae, said in a press release.
Last October, conventional mortgages had a 66% share, while FHA loans were at 30% and VA loans were at 2%. The percentage shares for all four loan types remained the same compared to September.
"It is important for lenders to educate millennials on the value of FHA loans that bring lower down payments and can allow these new homebuyers to stretch their dollar a little further even with rising interest rates."
The average loan amount in October was $189,686, down year-over-year from $198,864 and month-over-month from $192,005. The gender discrepancy in average closed loans was $10,257, where loan size for men as the primary borrower was $198,864 compared to $188,607 for women. Men as the primary borrower accounted for 60% of millennial closed loans.