Millennials are projected to overtake Baby Boomers as America’s largest generation, and it’s not far off either. Projections are that this seismic generational shift will occur as soon as 2019.
Millennials are growing up and they're becoming a new generation of homeowners, which is impacting the housing market in a big way. According to the National Association of Realtors’ 2018 Home Buyer and Seller Generational Trends Report, 36% of the homes sold in the U.S. over the past year were purchased by Millennials.That amkes them the largest segment of new homeowners in the country.
For this segment of the American population, mortgage rates are now a topic of intense interst. Apart from the mortgage rates,there are several other factors involved, including the size of the down payment and the credit score of the potential buyer.
Millennials credit is far from perfect. According to new data, average credit scores of Millennial homebuyers ranged from 662 to upwards of 750, depending on the city. Despite this, Millennials have shown you don’t have to have a perfect credit in order to buy a home. They're shopping around, using online tools, and seeing what mortgage rates their score qualifies for..
Trend-wise, within the last seven years, long-term mortgage rates have been at very high levels. The benchmark 30-year mortgage rate reached as high as 4.66% in May of this year versus last year when the interest rate was only at 3.9%.
Rising mortgage rates have been accompanied by a noticeable increase in real estate prices, which put the brakes on home buying activity over the summer when sales and purchase transactions typically experience an increase.
According to the NAHB/Wells Fargo Housing Opportunity Index, the combination of high prices and interest rates has brought down housing affordability to a 10-year low in the second quarter of 2018. But it doesn't appear to have affected the drive of Millennials to own their own home.