More millennial homebuyers are obtaining conventional financing over FHA financing, relying less on government-backed loans, according to the latest Ellie Mae Millennial Tracker™. Conventional and FHA—the most common types of mortgage loans for millennials—comprised 63 percent and 32 percent of millennial loans, respectively, in June.
“Conventional and FHA loans make up the vast majority of loan types among millennials, and tend to track in cycles,” said Joe Tyrell, executive vice president of Corporate Strategy for Ellie Mae, in a statement. “The numbers for June show us that, after a one-year high at 36 percent of all closed loans in February and March, FHA loans have been steadily decreasing for the past four months. Conventional loans are rising, from 60 percent in March to June’s 63 percent, indicating that, at least at the moment, millennials are slightly more able to afford a house without government guarantees. Alternatively, this also demonstrates a potential opportunity for greater borrower education on FHA and other loan options available.”
The average amounts of mortgage loans made to millennials in June were highest in San Jose-Sunnyvale-Santa Clara, Calif. ($598,606, on average), as well as in San Francisco-Oakland-Hayward, Calif. ($543,851), Los Angeles-Long Beach-Anaheim, Calif. ($436,967), Boston-Cambridge-Newton, Mass.-N.H. ($364,767), and Washington, D.C.-Arlington-Alexandria, Va. ($432,722). The share of mortgage loans made to millennials were highest in Muscatine, Iowa; Watertown, S.D.; Frankfort, Ind.; Oshkosh-Neenah, Wis.; and Quincy, Ill.-Mo.
The majority of millennial loans in June were purchases over refinances: 90 percent versus 10 percent, the Tracker shows.
Source: Ellie Mae
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