The share of closed loans originated for home purchase
continues to inch higher. Ellie Mae, in
its September Origination Insight Report,
says that share jumped from 68 percent in August to 71 percent. The upward trend in purchasing was most
pronounced for FHA loans where the share rose 5 percentage points to 83 percent.
For Conventional loans the share moved to 69 percent from 66 percent while
there was only a 1-point increase in the VA share, to 73 percent.
The distribution of loans did shift slightly for the
first time in months. The VA and FHA shares of closed loans remained at 10 and
20 percent respectively but the Conventional shared dipped by 1 point to 65
percent. The share of adjustable rate
mortgages (ARMS) increased to 7.2 percent from 6.6 percent in August.
refinances remain at a low percentage of aggregate closed loans and purchase
inventory continues to be tight as we move into the fall,” said Jonathan Corr,
president and CEO of Ellie Mae. “We did see the first reduction in interest
rates this month and with that, the percentage of ARMs began to increase.
However, we believe that the seasonal decline in home buying and continued
affordability constraints will shape the purchase market.”
Closing rates for all loans held
steady at 71.1 percent for the second month, the highest level so far in 2018.
Closing rates on purchase loans increased to 76.4 percent from 75.9 percent while
the pull-through rate of refinances rose from 63.5 percent to 64.4 percent. Ellie
Mae calculates closing rates from a sample of applications submitted 90 days
earlier, in this case the June 2018 crop.
The time to close all loans
increased to 44 days in September, up from 43 days in August. Time to close a
purchase loan held steady at 45 days, while time to close a refinance grew from
38 days to 42.
The FICO scores for all loans bumped
3 points higher, to an average of 727 in September while the average loan-to-value
ratio held steady at 79 for the second month and the average debt-to-income ratio
was 25/39 compared 26/39.
The Origination Insight Report mines data from a sampling of
approximately 80 percent of all mortgage applications that were initiated on
the Ellie Mae proprietary system. The
company says the report is a strong proxy for the underwriting standards employed
by lenders across the country.