Credit Remains Biggest Hurdle for Millennials
It is acknowledged as the biggest hurdle first time homebuyers have to face in the real estate market. The stringent rules of loans and mortgage credit, as a byproduct of the recent recession, has made many millennials think twice to buy a home. According to a report from CNBC.com, while financial institutions are paying the price for their misconduct during the mortgage crisis, millennials too are paying the price.
This was confirmed by Ellie Mae Executive Vice President of Corporate Strategy Joe Tyrell. Tyrell said, "The mortgage industry is poised to experience a monumental shift as more millennial homebuyers begin to enter the market."
He added, "There are roughly 87 million would-be homebuyers in the millennial generation and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs."
Since 2014, more than a third of home loans given to millennials were Federal Housing Administration loans. This was confirmed by Ellie Mae's Millennial Tracker. This is well above the 22 percent overall share in mortgage loans made available to the market by the FHA. While the downpayment requirement is just 3.5 percent, the mortgage needs to be insured, which is another cost for the burdened first time buyer.
The Millennial Tracker is the tool used nowadays for up to date demographic data for the new generation of homebuyers. According to a report from Housing Wire, searches can be done based on geography, age, gender, FICO score, marital status as well as the amortization mode.
Tyrell added, "Our new Ellie Mae Millennial Tracker gives mortgage lenders perspective into the next generation of homebuyers in order to better serve them, and ultimately help make their homeownership dreams a reality."
The tracker found that 37 percent of mortgages made to millennials since 2014 were from the FHA. The average period of closure of the transaction was 44 days. On the other hand, conventional loans comprised about 60 percent of loans given out, with an average closure period of 43 days.