According to a report by Forbes.com, rock-bottom interest rates are causing millennial home-buying to skyrocket. The target interest rate has dropped to near-zero, and now millennial homeowners have the unique opportunity to refinance at a much-improved rate.
Refinance shares, or the monthly percentage of refinance loans, rose to 38 percent for millennials, and average interest rates for 30-year loans in March closed by millennials dropped to 3.66 percent. And because much of the process has had to take place virtually, those lenders who had the jump on digital solutions are reaping the benefits.
"COVID-19 continues to have a significant impact on both borrowers and lenders," said Joe Tyrrell, chief operating officer at Ellie Mae, the digital lending platform. "A large percentage of older millennials, who are more likely to already own homes, are refinancing their mortgages to lock in lower interest rates. Younger millennials are refinancing at similar rates, but for this demographic, we're also seeing first-time home buyers take advantage of low rates as well as the availability of non-conventional loan types, which allow for lower down payments, helping them make the American dream of owning a home a reality."
Ellie Mae categorizes millennials based on age in two categories: younger millennials (21 to 29-year-olds) and older millennials (30- to 40-year-olds). Interestingly, even before homeowners saw the effects of COVID-19, more millennials were moving toward homeowning. Now, some experts predict that the trend is sure to increase in this favorable market.