Millennial Borrowers Taking Out Larger FHA Loans to Compete for Limited Inventory, Latest Ellie Mae Millennial Tracker Finds
January 15 2019 - 9:00AM
Business Wire
Millennial homebuyers are taking out larger FHA-backed mortgage
loans year-over-year, according to November data from the Ellie Mae
Millennial Tracker™. Twenty-six percent of all closed loans to
members of the generation in November were for FHA loans, with an
average loan size of $186,454, up from $178,862 in November 2017
and $170,167 in November 2016. Comparatively, Conventional loans
accounted for 69 percent of closed loans made to Millennial
borrowers during the same period, with an average loan amount of
$211,268. Additionally, two percent of loans were for VA loans and
three percent were unspecified.
FHA loans were more likely to be used by borrowers to purchase a
home (95 percent), with just five percent of these type of loans
going toward a refinance. Among conventional loans, 88 percent were
for purchases and 11 percent were for refinances.
“November data from the Millennial Tracker shows that Millennial
borrowers are taking out larger FHA mortgages and spending more on
a home than in the past,” said Joe Tyrrell, executive vice
president of corporate strategy for Ellie Mae. “For example, the
average home appraisal value based on closed FHA loans for November
2018 in the San Francisco region was $562,479 compared to $523,192
a year ago at this same time, and up from $438,694 in 2016. We are
seeing that as inventory remains relatively slim, borrowers are not
waiting to buy an affordable home and are instead increasing their
loan amount to purchase what is available on the market.”
Across the country, borrowers are taking out much larger FHA
loans compared to previous years. Highlighted averages for major
metro areas include:
Market
Avg. Loan Amount
(Nov. 2018)
Avg. FHA Loan Amount
(Nov. 2018)
Avg. Home Appraisal Value (for FHA
Loans)
(Nov. 2018)
Avg. Loan Amount
(Nov. 2017)
Avg. FHA Loan Amount
(Nov. 2017)
Avg. Home Appraisal Value (for FHA
Loans)
(Nov. 2017)
San Francisco-Oakland-Hayward $642,877
$505,871 $562,479
$523,633 $460,853
$523,192 Los Angeles-Long Beach-Anaheim
$479,362 $442,569
$479,091 $442,015
$389,031 $425,517 Boston-Cambridge-Newton,
Mass./N.H. $376,481
$353,680 $379,897
$367,733 $343,219
$370,635 Washington, D.C.-Arlington-Alexandria
$351,631 $313,168
$331,633 $334,156
$283,584 $305,467 Chicago-Naperville-Elgin
$221,962 $194,630
$207,841 $205,667
$178,335 $189,715
Additional findings from the November 2018 Ellie Mae Millennial
Tracker include:
- Men were listed as the primary borrower
for 56 percent of FHA loans, women were listed on 35 percent, and
nine percent were unspecified
- It took an average of 43 days to close
both FHA and Conventional loans across the country, compared to the
average of 42 days for all loans
- In November, 89 percent of all loans
closed by Millennials were for purchases, with just 10 percent for
refinances
- Interest rates on all loans rose to 5.1
percent, the highest percentage point since Ellie Mae started
tracking this data in 2016, up from 4.96 percent in October, and up
from 4.17 percent a year ago
- The average FHA loan borrower FICO
score was 680 and the average score for those who opted for
Conventional loans was 744
Ellie Mae® (NYSE: ELLI) is the leading cloud-based platform
provider for the mortgage finance industry. The Ellie Mae
Millennial Tracker is an interactive online tool that provides
access to up-to-date demographic data about this new generation of
homebuyers. It mines data from a robust sampling of approximately
80 percent of all closed mortgages dating back to 2014 that were
initiated on Ellie Mae’s Encompass® all-in-one mortgage management
solution. Given the size of this sample and Ellie Mae’s market
share, it is a strong proxy of Millennial mortgage indicators
across the country. Searches can be tailored by borrower geography,
age, gender, marital status, FICO score and amortization type.For
more information, visit http://elliemae.com/millennial-tracker.
ABOUT THE ELLIE MAE MILLENNIAL TRACKER
The Ellie Mae Millennial Tracker focuses on Millennial mortgage
applications during specific time periods. Ellie Mae defines
Millennials as applicants born between the years 1980 and 1999. New
data is updated on the first Monday of every month for two months
prior. The Millennial Tracker is a subset of our Origination
Insight Report, which details aggregated, anonymized data pulled
from Ellie Mae’s Encompass origination platform. Additional
information regarding the Origination Insight Report can be found
at http://elliemae.com/resources/origination-insight-reports. News
organizations have the right to reuse this data, provided that
Ellie Mae, Inc. is credited as the source.
ABOUT ELLIE MAE
Ellie Mae (NYSE:ELLI) is the leading cloud-based platform
provider for the mortgage finance industry. Ellie Mae’s technology
solutions enable lenders to originate more loans, reduce
origination costs, and shorten the time to close, all while
ensuring the highest levels of compliance, quality and efficiency.
Visit EllieMae.com or call 877.355.4362 to learn more.
© 2019 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®,
Mavent®, Velocify®, the Ellie Mae logo and other trademarks or
service marks of Ellie Mae, Inc. appearing herein are the property
of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other
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version on businesswire.com: https://www.businesswire.com/news/home/20190115005110/en/
Erica HarvillEllie Mae, Inc.(925)
227-5913Erica.harvill@elliemae.com
Alexandra Gardell KreuterAllison+Partners(646)
428-0618EllieMae@allisonpr.com
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