Real Estate News

New report shows increase in mortgage sales for millennials

Published: 08 Mar 2017

Last year's predictions of rising millennial presence in the housing market are coming true. That could reflect a confidence for the younger generation that spurs new purchases, depending on what happens in the future.

This optimism comes from the most recent report from Ellie Mae. The company's Millennial Tracker found that younger homeowners are borrowing from the FHA, and made up the vast majority of closed loans in January at 84 percent. Ellie Mae corporate strategy executive vice president, Joe Tyrrell, explained the recent phenomenon and called it a notable trend.

"As the purchase market heats up, we will continue to watch the FHA purchase trend amongst millennials," he said. "It is not surprising to see millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. As more millennials enter the market, we expect to see the popularity of FHA loans continue to increase."

The National Association of Realtors has also found similar mortgage patterns worth noticing within Millennials. According to its Home Buyer and Seller Generational Trends report, the NAR found that 34 percent of the 2016 crop of homebuyers were millennials. The next-oldest demographic, Generation X, only accounted for 28 percent of buyers. In this case, Generation X referred to those between 37 and 51.

 In general, 35 percent of the year's buyers were purchasing their first home. The majority of both generations prioritized the importance of homeownership, as opposed to the older buyers, which had different dominant concerns, such as preparing for retirement.

What's more, 83 percent of all of the homes purchased were detached single-family residences. Buyers in the millennial generation also expected to live in their homes for half as long as those between age 52 and 61.