When it comes to home buying, there is an app for that, but unfortunately for Millennials, it isn’t — for once — catered to them.
Ellie Mae, the software company that processes about a quarter of U.S. mortgage applications, has just released its “Ellie Mae Millennial Tracker,” which will track Millennial loan trends in the United States.
The tool will refresh its data during the first week of every month in order to provide demographic data about the new generation of home-buyers to mortgage lenders.
Joe Tyrell, Ellie Mae’s executive vice president of corporate strategy, said that “Our new Ellie Mae Millennial Tracker gives mortgage lenders perspective into the next generation of home-buyers in order to better serve them, and ultimately help make their home-ownership dreams a reality.”
So far, March data from the Millennial Tracker, which takes data of Americans aged 18 to 35, showed women as the primary borrower on 31% of closed loans. Ladies also had an average of 724 for their FICO score. Men were listed as the primary borrower on 66% of closed loans.
Indeed, with more and more Millennials entering the housing market, the name of the game is bound to change. As Tyrell said, “There are roughly 87 million would-be home buyers in the millennial generation and 91% of them say they intend to own a home one day. Lenders must prepare today to meet their needs.”
Those new home buyers have several obstacles to overcome across the board when it comes to taking out home loans, and one of the greatest is credit.
Millennials have come of age in an almost “post-apocalyptic housing market,” where lenders are still paying untold amounts in reparations after the housing bubble burst in 2008. Many lenders require a 680 minimum credit score, which can be hard for young people who have just started to build credit and may have student loans.
Unfortunately, many Millennials, who were only kids during the crisis, must pay the price in the form of higher credit score requirements. Also, most Millennials are taking out FHA loans, which tend to run high mortgage insurance premiums.
Mortgage rates are at historic lows right now, but many home prices are rising faster than incomes. FHA loans are attractive to young buyers because they allow just a 3.5% down payment.