Refinances Remain Ready Among Millennials

Refinances among Millennial borrowers regained their popularity in the fourth quarter of 2017, according to the latest Ellie Mae Millennial Tracker. December was the third straight month refinances accounted for 15 percent of all closed loans for Millennial borrowers – the highest percentage of refinances for this demographic since February 2017’s annual high of 17 percent. The percentage of closed purchase loans remained at 84 percent, decreasing from June 2017’s peak of 90 percent.

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Specifically, the percentage of Conventional refinances remained at 19 percent, holding steady since October, while FHA refinance loans stayed at six percent from the month prior. The percentage of Conventional purchase and FHA purchase loans also remained the same from November to December at 80 and 94 percent, respectively.

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“With seasonality and low inventory levels at the end of the year, Millennial borrowers continued to take advantage of refinance options during the fourth quarter,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “Many may have been driven by a desire to take advantage of low interest rates given uncertainty about potential rate hikes in the new year.”

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Other statistics of note for Millennial borrowers in December included:

>>The average 30-year note increased slightly from 4.18 in November to 4.22 in December, still lower than 2017’s highest monthly average of 4.34 in April.

>>The average time to close all loans held at 44 days in December.

>>Average time to close a refinance held at 45 days, while the time to close a purchase also remained flat at 42 days, the same since June 2017.

>>Average FICO scores for all closed loans fell one point from the month prior to 722.

The top Metropolitan Statistical Areas (MSAs) for Millennials by percentage of mortgage loans closed in December included Casper, Wyo. (71 percent), Williston, N.D. (63 percent), as well as Victoria, Texas and Mount Pleasant, Mich. (both 61 percent).

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 mortgage management solution. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type.

Refinance Activity Inches Up A Bit

Refinancing activity grew 4 percent between September and October to account for 40 percent of overall mortgage volume—the highest level in six months, according to the latest Origination Insight Report released by Ellie Mae. The October 2014 report also found that the average 30-year interest rate for all loans fell for the sixth consecutive month to 4.371 percent, the lowest average since July 2013.

The Origination Insight Report mines its application data from a robust sampling of approximately 57 percent of all mortgage applications that were initiated on the Encompass origination platform. The Origination Insight Report is considered a strong proxy of the underwriting standards employed by lenders across the country.

“Refinancing activity in October was at the highest level since March of this year, thanks largely to the current interest rate environment,” said Jonathan Corr, president and COO of Ellie Mae. “Low rates are creating opportunities for homeowners to either lower their payments or capitalize on their homes’ equity.”

According to the Origination Insight Report, 33 percent of closed loans in October had an average FICO score of under 700 compared to 28 percent in October 2013. Among other findings in the report:

>> Despite the increase in refinance share, the average time to close a refi dropped from 40 days to 39 days.

>> The average 30-year interest rate for all loans fell to 4.371 percent and the average 30-year interest rate for FHA loans declined to 4.237 percent. Both were at the lowest level since July 2013.

>> Closing rates on purchase loans rose to 66.1 percent, the highest percentage since Ellie Mae began tracking this data in August 2011.

To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the July 2014 applications—to calculate an overall closing rate of 59.4 percent in October 2014.

Pair Make Rate Resets Easier

Churchill Mortgage has partnered with Mortgage Harmony to provide borrowers with its HarmonyLoan Rate Reset product, a patented consumer-initiated interest rate-resetting mortgage that provides the benefit of a refinance without the expense and time associated with the traditional process. Churchill is a leader in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 33 states.

Churchill joins Mortgage Harmony’s network of lenders and will now offer the HarmonyLoan feature on selected products, enabling them to compare the terms of their existing mortgage to the HarmonyLoan offer of the day and reset interest rates as often as every 180 days. Borrowers can review the offer on a secure, customized website that is powered by Mortgage Harmony’s Loan Retention Software (LRS). If eligible, the borrower selects the offer and completes the Rate Reset via e-Signature, reducing the process from 30 days or more to less than 10 minutes. The HarmonyLoan also eliminates out-of-pocket costs and administrative hassles borrowers face with traditional refinancing.

“The HarmonyLoan alleviates the headaches and duplicate processes that riddle traditional refinances, while providing borrowers with a higher degree of transparency and encouraging them to take more control of their mortgage,” said Mike Hardwick, president of Churchill Mortgage. “Partnering with Mortgage Harmony enhances our overall level of service and strengthens the relationships we have with the community, as well as the industry at large.”

“Churchill’s borrower-focused approach to lending compliments our mission to provide financial institutions with solutions that streamline and accelerate internal processes,” said Keith Kelly, CEO of Mortgage Harmony Corp. “In addition to empowering borrowers with the HarmonyLoan, Churchill will also help their local bank and credit union partners foster new relationships and improve their overall loan retention rates.”

The HarmonyLoan is offered on select sets of adjustable rate mortgage products and is available in select states.