Millennial Mortgage Takeover Is Here

Millennials bucking stereotypes to claim their share of mortgages

Scotsman Guide

Feb 27, 2019  12:00 ET’s recent report that millennials now top the mortgage market for dollar volume of loans originated confirmed something that many people knew was coming.

The millennial mortgage takeover is finally here.

MillennialsEvidence has been steadily, if slowly, mounting for the last couple of years. Millennials passed their Generation X counterparts in January 2017 as the age group responsible for the most new mortgages. By the end of 2018, the millennial share of newly originated loans had risen to 45 percent, compared to 36 percent for Gen Xers and 17 percent for baby boomers.

But in terms of new loans by dollar volume, Generation X held onto the crown until this past November, when millennials finally took the mantle, outpacing their slightly older peers 42 percent to 40 percent. (Baby boomers accounted for a 17 percent share).

According to’s report — based on a sample of mortgage loan originations from Texas-based digital marketplace Optimal Blue — this latest development indicates that millennials are showing more willingness than other generations to take on larger loans in order to achieve homeownership.

This isn’t to say that affordability is no longer the primary driver of millennial homebuying decisions. But this generation is adapting by purchasing in more affordable markets, where their dollar is going further.

“Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power and, hence, their footprint in the market,” said Javier Vivas,’s director of economic research.

“The stereotype that millennials primarily choose to buy homes and live in large metro areas isn’t the reality. Results show millennials’ expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful.”

This is reflected in the report’s ranking of top millennial markets, where millennials generate more than half of new mortgages in the market and their share grew by more than 4 percent. Buffalo, New York, tops the list, while the rest of the top 10 is mostly populated by other inland secondary metros — so-called “18-hour cities” like Pittsburgh, Milwaukee, Cincinnati, St. Louis, Indianapolis, Cleveland and Columbus, Ohio.

One metric in which millennials still lag behind older cohorts is downpayments. While members of prior generations have been able to put down more money in response to escalating home prices, millennials haven’t been able to shift the needle as much. Since 2015, millennials have consistently made lower downpayments than other generations. Millennials, for example, made an average downpayment of 8.8 percent this past December, compared to 11.9 percent for Generation X and 17.7 percent for baby boomers, who often have more built-up equity.

Millennials also still typically buy less expensive homes, with a $238,000 median purchase price. Gen Xers and baby boomers have median purchase prices of $289,000 and $264,000, respectively.

Part of that variance is because young buyers usually enter the market at starter-home prices, but’s study suggests that millennials also are increasing their purchase prices at a higher pace than the cohorts before them.

“The median price of a mortgaged home purchased by millennials rose by 4.8 percent over the past year, compared to 3.7 percent for Generation X and 3.5 percent for baby boomers, said Sabrina Speianu,’s senior economic research analyst. “This rate of growth has been consistently higher since May 2014 as millennials begin to bridge the gap in purchase prices.”

Speianu noted that millennials’ purchase-price growth is slowing, however.

“The rate of growth has been decreasing from its peak of 9.2 percent in March 2015,” she said. “If this deceleration continues, it could be an indicator of millennials getting close to an age and life stage-appropriate ‘ceiling’ price.”


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