Loans for home refinance made up 51 percent of all loan
originations in January, an 8 percent jump compared to December. Ellie
Mae’s Origination Insight Report said
this was the highest share refinancing has had in more than 18 months.
Refinancing hit a low at 32 percent in
July but as interest rates retreated from early 2014 highs, the share of refinancing
increased steadily. In all of 2014
refinancing averaged a 38 percent share of originations. Despite the jump in volume, the average time to
close a refinance loan fell from 42 days to 39 days.
Ellie Mae said the closing rate for all
loans rose for the fifth consecutive month to 62.4 percent, the highest level
since Ellie Mae began tracking this data in 2011. The closing rate on refinancing was 56.5
percent and for purchase loans 68.3 percent.
“Many home owners who put off refinancing over the past year because they did
not have equity in their homes are getting a second chance in 2015,” said
Jonathan Corr, president and CEO of Ellie Mae. “Low rates and the decision by
the FHA to lower the mortgage insurance premium (MIP) are good news for the purchase
market as well.”
The refinancing share of conventional
loans was even higher than the overall share at 62 percent. However purchase loans dominated with both
FHA and VA originations. Purchases made
up 82 percent of the former and 58 percent of the latter.
Conventional mortgages had a 70 percent
share of the total market compared to 67 percent in December while the FHA
share dropped to 15 percent from 20 percent.
VA lending was 11 percent of the market, unchanged since October.
The percentage of closed loans with an average FICO score below 700 dropped
from 32 percent in January 2014 to 30 percent last month and the average score
for all loans was 731, 5 percentage points higher than the overall 2014 average.
The FICO score on closed VA refinance loans
jumped 8 points from December to 716 and rose from 701 to 704 for purchase mortgages.
Insight Report mines Ellie Mae data from a large sampling of the approximate
57 percent of all mortgage applications which are initiated on its Encompass®