Ellie Mae said its Origination
Insight Report for December reflects the first effects of rising interest
rates. Loans for refinancing slipped
from 47 percent in November to 46 percent as the reciprocal number, purchase
loans, rose 1 point to 54 percent. The
company says this likely signals an upward trend in purchase mortgages that
will continue throughout 2017.
loans made up 66 percent of closed loans during the month, down 2 percentage
points from November while FHA and VA lending was unchanged at 20 percent and 9
Closing rates for all loans
increased to 73.2 percent in December, the highest rate in 2016. Refinance
closing rates increased to 69.6 percent, up from 68.7 percent a month earlier and
purchase closing rates increased to 77 percent from 76.1 percent. To calculate
closing rates the company reviews a sampling of loan applications initiated 90
days earlier, in this case the September 2016 applications.
The average time to close loans
ticked up one day to 50 days in December.
Ellie Mae said this likely reflects holiday seasonality as well as an
effort to close loans before rates increase further. Timelines for both purchase loans and
refinances increased by a day as well, to 48 and 50 days respectively.
Average FICO scores decreased
slightly in December to 726, down from 728, largely due to a 4 point drop in
conventional refinance scores to 739. Conventional
purchase FICO scores stayed steady at 753 for the third month, FHA purchase scores
remained at 686 while its refinance scores gained one point to 655. VA purchase FICO scores fell 2 points to 707,
refinance scores dropped 1 point to 709.
“As rates began to increase we saw
purchases tick back up in December, signaling the start of a trend we expect to
continue into 2017,” said Jonathan Corr, president and CEO of Ellie Mae. “We
also saw closing rates rise to the highest percentage in 2016 as homebuyers
locked in rates and lenders closed loans before the conclusion of the year.”
The Origination Insight Report
mines its application data from a sampling of approximately 75 percent of all
mortgage applications originated on Ellie Mae’s mortgage management system.