In June the nation’s leading residential mortgage platform reported the highest market share of loans were closed for home purchases as opposed to refinancing mortgages in the two years the company has been reporting monthly origination data.
Ellie Mae® found that nearly half, 49 percent, of all loans closed in June were purchase mortgages and only 51 percent were refinancing. Higher interest rates have been reducing refinancing applications since last spring.
The mortgage processor also reported that credit requirements for mortgages are slowly easing. In June 2012, 71.47 percent of mortgages had an average FICO score of more than 700, compared to only 52.28 percent in June 2013. More buyers with FICO scores lower 700 are getting approved for mortgages than a year ago. Some than 47.72 percent of mortgages from June 2013 had an average FICO score under 700, compared to only 28.53 percent from June 2012.
MONTHLY ORIGINATION OVERVIEW FOR JUNE 2013
|June 2013*||May 2013*||6 Months Ago
|1 Year Ago
|Days to Close|
|ARMs vs. Fixed, Length, Rate|
|15 Year %||16.5%||16.4%||15.9%||15.8%|
|30 Year – Note Rate||3.918||3.747||3.609||3.992|
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR JUNE 2013
|Closed First-Lien Loans (All Types)||Denied Loans
|FICO Score (FICO)||742||701|
To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the March 2013 applications) to calculate an overall closing rate of 54.3 percent in June 2013, up from 53.5 percent in May 2013.
“In June, the mix of refinance-to-purchase loans continued to rebalance as higher rates made refinancing less attractive and the prospect of higher home prices and potentially higher interest rates may have brought more buyers to the closing table,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Closed purchase loans accounted for 49% of the volume in June 2013, the highest level since we began tracking in August 2011.
“The average interest rate on a 30-year loan rose to 3.918% in June 2013, the highest point since June 2012 when it was 3.992%,” Corr noted. “The transition from a refinance to a purchase market may also be why we saw a growth in adjustable rate mortgages in June 2013, hitting 4% for the first time since May 2012. This may be a sign that some buyers are trying to stretch their budget as both home prices and interest rates tick up.
Finally, Corr noted, “HARP-related refinancing activity continued to cool with conventional refinances at 95%-plus LTV dropping from 9.40% in May 2013 to 8.00% in June 2013.”
About Ellie Mae Origination Insight Report
In 2012, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately three million loan applications, or 20% of all U.S. mortgage originations. The Origination Insight Report mines its application data from a robust sampling of approximately 44% of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.