Millennials represent the next generation of home buyers and have rapidly become the most active segment of the population when it comes to applying for mortgage loans. When you have a younger demographic, and especially a segment greatly affected by higher student loan debts than ever before, you might think that credit scores would be causing problems for millennials.
In actuality, this is not the case. In fact, Ellie Mae just released its latest Millennial Tracker report. It shows that the average borrower credit score for millennials is much better than most would expect. Even the experts are surprised. The low end of the range was found in rural Madisonville, Kentucky (662) while the highest average score (757) was found in San Francisco.
Geographic Market Breakdown
Coastal metropolitan areas generally show the highest average credit scores. We’re talking places like Los Angeles, Boston, Miami and, yes, San Diego. This is not a surprise because the loan amounts are usually higher in these metro areas, as well as average incomes. Large loans of course require higher credit scores.
Still, even many rural areas showed higher-than-expected average FICO scores. The national average for millennial credit scores in May 2018 was a healthy 721, which is actually down. It’s at the lowest average since April 2017, so you can see just how good the scores have been for this important market segment. By comparison, the average FICO score for all borrowers who closed loans in May 2018 was 724. This means millennials are right at the national overall average.
A Closer Look at the Numbers
The Ellie Mae Millennial Tracker report also shows that home purchases made up 90% of all closed loans for millennials (up 1% from the previous month). Meanwhile refinances decreased by 1%, going from 10% down to 9%. The majority of mortgages secured by millennials were conventional loans. 68% were conventional while 28% were FHA and just 2% were VA. The remaining 3% were undisclosed.
Some of the other figures show that millennial males were listed as the primary borrower on 62% of the closed loans, while females were listed on 32%. The remaining 7% were unspecified. The average age of today’s millennial home buyer is 29.9.
Understanding the Market Trends
As you can tell, I really love looking at reports like these to understand market trends and see where tomorrow’s mortgage loan borrowers are coming from. The millennial generation will continue to set the pace and it’s exciting to see that younger borrowers are maintaining high credit scores. That wasn’t always the case with previous generations.
For anyone in the San Diego area in need of a mortgage, refinance or cash-out refinance, count on my team at Transparent Mortgage to help you make the right decisions. Be sure and ask about being pre-approved for your home loan. Call us today at (619) 929-0199.