Ellie Mae: Millennials’ 38% share fuels all-time high refis in March
What happens when you mix low rates with millennial homeowners? A lot, apparently. In March, low interest rates drove the volume of closed refinance loans up to its highest level since Ellie Mae began tracking that data in 2016, according to the latest Ellie Mae Millennial Tracker. And who was leading the charge? Millennials, whose share represented 38% of all the refinancing activity, up four percentage points from February, in a trend that’s continued for 12 months.
Affordability and lending automation helped.
The Federal Reserve cut its target interest rate to near-zero in March, “giving savvy millennial homeowners the opportunity to refinance to more favorable rates,” said Joe Tyrrell, Chief Operating Officer at Ellie Mae. The average interest rate for all 30-year loans closed by millennials in March was 3.66%, the lowest average rate since May 2016 and down from 3.86% in February.
“What’s more surprising is time to close numbers decreasing despite the surge in refinance activity and the limitations lenders are facing as a result of COVID-19,” Tyrrell said. “Technology is now more important than ever and lenders investing in the solutions necessary to manage their pipelines virtually are seeing success.”
As a result, despite the uptick in refinance activity, average time to close for refinance loans fell two days month-over-month, from 38 to 36, compared to shrinking from 41 to 39 days for all loans, during the same time-period.
Ellie Mae defines millennials as applicants born between the years 1980 and 1999. The millennials subset of Ellie Mae’s Origination Insight Report further divides this demographic into older millennials, 30-40 years old, and younger millennials, 21-29 years old.
The refinance share for older millennials was 46%, in March, up 5% month-over-month, almost double the 21% share for younger millennials. Average interest rates for both groups were 3.66%.
In March, 27% of all loans closed by younger millennials were FHA, versus 16% for older millennials. Indicating lenders are making progress in educating millennials, especially younger millennials, on the various loan types available, said Tyrrell, which “is a priority for lenders.”
Redfin: COVID-19 pressuring lenders to adopt tighter credit rules
The financial uncertainty caused by COVID-19 is pressuring banks to tighten mortgage-lending standards, which inevitably reduce options for house hunters hoping to lock down home loans, according to a Redfin analysis.
Furthermore, “as banks retreat from the jumbo loan market,” credit tightening is equally affecting low-income and affluent house hunters, The Mortgage Credit Availability Index, which measures how easy it is to obtain a home loan, fell 16% in March, “to the lowest level in five years.”
Unfortunately, said Redfin senior economist Sheharyar Bokhari, thousands of previously priced out Americans trying to take advantage of low mortgage rates “are now faced with another roadblock.”
Amid increasing unemployment and forbearance requests, JPMorgan Chase and Wells Fargo started to require a 20% down payment and raised the credit score minimum to 700 and 680 respectively, the report found. “And other banks may follow suit.”
Nearly half of all Americans financed their home purchases with down payments of less than 20% in 2019. Comparatively, an estimated 25% of the loans written by Redfin Mortgage in the last quarter may not have been possible to originate under the new standards, the report notes, since “the investors who buy the loans have become more selective about what they purchase.”
Redfin analyzed the 50 largest U.S. metropolitan areas. Nine of the 10 more affordable metros where homeowners more often put less than 20% down in 2019, had median sale prices below the national level of $348,809. Six of those 10 metros were on the East Coast.
FHA loans typically cater to first-time homebuyers with lower budgets and credit scores, who “also have among the highest forbearance rates,” and are deemed riskier, Bokhari said. Of the metros Redfin analyzed, those the largest share of home sales financed with FHA loans in 2019 included: Camden, NJ at 30.7%, followed by Riverside, CA and Detroit at about 25%.
While the middle of the market is relatively unscathed, Bokhari added, some lenders are halting jumbo loans entirely. Jumbos do not have Fannie Mae or Freddie Mac guarantees, and at more than $510,400, or $765,600 in higher cost areas, carry more risk. The MCA Index fell 37% last month, which is much higher than 2.7% for conventional loans.
Of the 10 metros with the highest share of jumbo loans in 2019, eight were on the West Coast. San Francisco, the most expensive metro in the Redfin analysis, had the highest share of home purchases funded with jumbo loans, at more than 50%, compared to 5.5% of home sales nationwide.
Miami Realtors Assoc. offers Remine’s tech to 52K members
The Miami Association of Realtors has adopted two home sales tools designed by real estate fintech Remineto connect mortgage lenders, real estate agents and consumers on a centralized platform that supports the front-end home buying journey, from search to keys.
The association’s 52,000 members will have access to Remnie Pro and the Single Sign-On (SSO) solution.
Remnie Pro powers property search, consumer engagement, mortgage data and a free credit score, on mobile and desktop. Members transitioned to Remine Pro after the recent release of Remine Live streaming portal that enables virtual property tours.
The SSO feature offers real estate agents an easy way to access property listings, and broker applications from a single portal. The dashboard design enables in-app messaging, multi-factor authentication, time-based passwords, multi-level access control, and the adoption of third-party applications.
“After an in-depth analysis of our SSO needs, it was clear that we needed more association, MLS, broker, and team lead controls,” said Teresa Kinney, CEO of Miami Realtors. Remine SSO brings the best options “from seamless workflow to the full reporting capabilities.”
Established in 2016, Remnie now serves over 1 millionreal estate professionals in the U.S. and Canada.
The platform consists of eight cohesive products designed to connect customers to real estate professionals and mortgage lenders “through one integrated experience,” said Leo Pareja, President and Co-Founder of Remine. “Having Miami Realtors adopt our front end, and SSO products reflect the importance and necessity for end-to-end solutions.”
Amilda is a journalist and branding consultant interested in how entrepreneurs turn brilliant ideas into products and services that advance business acumen and improve people’s lives in unprecedented ways. She has covered mortgage finance for over 15 years.