No Surprise: Pull-Through Rates hit 2016 High


Borrowers apparently noted a slight uptick in mortgage
and pushed refinancing higher in October. 
Ellie Mae’s Origination Insight Report notes an increase in that share
of lending during the month that affected all loan types.  There was an overall gain of 2 percentage
points in refinancing’s share to 47 percent, the highest since January.

The percentage of FHA refinances
increased to 21 percent in October, up from 19 percent in September, and VA
refinances increased to 31 percent, up from 27 percent. Refinancing rose to a
57 percent share of conventional refinances loans, a 1 point gain. 

Sixty-eight percent of all loans
originated during the month were conventional, 20 percent went to FHA, and 9
percent were VA loans.  This distribution
was unchanged from September.

There was a significant improvement
in the closing rate
for all loans, from 71.8 percent to 73 percent.  The rate for purchase loans increased to 77.2
percent from 76.4 percent in September and the rate for refinancing rose from
66.4 percent to 68 percent.  All rates
were the highest so far in 2016.  Ellie
Mae calculates the closing or pull-through rate based on loans which began 90
days before the reporting period, in this case in July.

The average time to close all loans
remained unchanged in October at 48 days. The timeline for a purchase was 46
days, one day less than in September while the time to close a refinance held
at 50 days.

There was also a slight dip in the
average FICO scores for closed loans; 730 rather than 731.  Conventional purchase FICO scores decreased
to an average 753 in October, and conventional refinance average FICO scores
decreased to 745. The debt-to-income (DTI) ratio for all closed loans remained
at 24/37, and the loan-to-value (LTV) ratio was unchanged at 78 percent.

“Refinance activity represented 47
of closed loans in the month, up from 45 percent in September,” said
Jonathan Corr, president and CEO of Ellie Mae. “We saw increases in refinance
percentages for FHA, VA and conventional loans, bolstered by the very low
30-year note rate that rose only slightly to 3.760. We believe that homebuyers
are taking advantage of the continued low rates to find monthly savings by
refinancing their mortgages.”

The Origination Insight Report
mines its application data from a sample of approximately 75 percent of all
mortgage applications that were initiated on the company’s mortgage management
system. Ellie Mae says its Origination Insight Report is a strong proxy
of the underwriting standards employed by lenders across the country.

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